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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,
    2003                                                
|  
|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 25,
2003: 55,515,347 shares



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|                                                                         |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------------------ | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                                                         | FORWARD-LOOKING STATEMENTS                                                                   
|                                                                         | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                                         | HIGHLIGHTS FOR THE QUARTER                                                                   
|                                                                         | OVERALL RESULTS                                                                              
|                                                                         | OUR BUSINESS                                                                                 
|MORTGAGE BANKING ACTIVITIES                                             
|                                                                         | Loan Production                                                                              
|                                                                         | Mortgage Production by Division and Channel                                                  
|INVESTING ACTIVITIES                                                    
|                                                                         | Investment Portfolio Group                                                                   
|Construction Lending                                                    
|HELOC Portfolio                                                         
|                                                                         | NET INTEREST INCOME                                                                          
|                                                                         | OVERALL INTEREST RATE RISK MANAGEMENT                                                        
|                                                                         | CREDIT RISK AND RESERVES                                                                     
|GENERAL                                                                 
|SECONDARY MARKET RESERVES                                               
|                                                                         | OPERATING EXPENSES                                                                           
|                                                                         | DIVIDEND POLICY                                                                              
|                                                                         | FUTURE OUTLOOK                                                                               
|                                                                         | LIQUIDITY AND CAPITAL RESOURCES                                                              
|OVERVIEW                                                                
|PRINCIPAL SOURCES OF CASH                                               
|PRINCIPAL USES OF CASH                                                  
|ACCUMULATED OTHER COMPREHENSIVE LOSS                                    
|REGULATORY CAPITAL REQUIREMENTS                                         
|                                                                         | KEY OPERATING RISKS                                                                          
|INTEREST RATE RISK                                                      
|VALUATION RISK                                                          
|CREDIT RISK                                                             
|LIQUIDITY RISK/ACCESS TO CAPITAL MARKETS                                
|GOVERNMENT REGULATION AND MONETARY POLICY                               
|COMPETITION                                                             
|OTHER RISKS                                                             
|                                                                         | CRITICAL ACCOUNTING POLICIES                                                                 
|                                                                         | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                            
|                                                                         | ITEM 1. FINANCIAL STATEMENTS                                                                 
|CONSOLIDATED BALANCE SHEETS                                             
|CONSOLIDATED STATEMENTS OF EARNINGS                                     
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              
|                                                                         | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                                              
|                                                                         | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                                                         | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                                                              
|EXHIBIT 10.1                                                            
|EXHIBIT 31.1                                                            
|EXHIBIT 31.2                                                            
|EXHIBIT 32.1                                                            
|EXHIBIT 32.2                                                            
|EXHIBIT 99.1                                                            



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FORM 10-Q QUARTERLY REPORT

For the Period Ended June 30,
2003


TABLE OF CONTENTS

|                                   |  |                                                                                           |  |      |    | 
|---------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                   |  |                                                                                           |  | Page
|                                   |  |                                                                                           |  |     
|PART I.  FINANCIAL
    INFORMATION
|                                   |  | Forward-looking Statements                                                                |  |      | 2  | 
|Item 2.                            |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |      | 2  | 
|                                   |  | Highlights for the Quarter                                                                |  |      | 2  | 
|                                   |  | Overall Results                                                                           |  |      | 3  | 
|                                   |  | Our Business                                                                              |  |      | 4  | 
|                                   |  | Mortgage Banking Activities                                                               |  |      | 11 | 
|                                   |  | Loan Production                                                                           |  |      | 11 | 
|                                   |  | Mortgage Production
    by Division and Channel                                           |  |      | 12 | 
|                                   |  | Loan Sales                                                                                |  |      | 16 | 
|                                   |  | Investing Activities                                                                      |  |      | 19 | 
|                                   |  | Investment
    Portfolio Group                                                            |  |      | 21 | 
|                                   |  | Construction Lending                                                                      |  |      | 28 | 
|                                   |  | HELOC Portfolio                                                                           |  |      | 30 | 
|                                   |  | Net Interest Income                                                                       |  |      | 31 | 
|                                   |  | Overall Interest Rate Risk Management                                                     |  |      | 34 | 
|                                   |  | Credit Risk and Reserves                                                                  |  |      | 35 | 
|                                   |  | General                                                                                   |  |      | 35 | 
|                                   |  | Secondary Market Reserves                                                                 |  |      | 38 | 
|                                   |  | Operating Expenses                                                                        |  |      | 39 | 
|                                   |  | Dividend Policy                                                                           |  |      | 39 | 
|                                   |  | Future Outlook                                                                            |  |      | 39 | 
|                                   |  | Liquidity and Capital Resources                                                           |  |      | 40 | 
|                                   |  | Overview                                                                                  |  |      | 40 | 
|                                   |  | Principal Sources of Cash                                                                 |  |      | 40 | 
|                                   |  | Principal Uses of Cash                                                                    |  |      | 42 | 
|                                   |  | Accumulated Other Comprehensive Loss                                                      |  |      | 42 | 
|                                   |  | Regulatory Capital Requirements                                                           |  |      | 43 | 
|                                   |  | Off-Balance Sheet Arrangements                                                            |  |      | 44 | 
|                                   |  | Contractual Obligations                                                                   |  |      | 44 | 
|                                   |  | Key Operating Risks                                                                       |  |      | 44 | 
|                                   |  | Interest Rate Risk                                                                        |  |      | 44 | 
|                                   |  | Valuation Risk                                                                            |  |      | 45 | 
|                                   |  | Credit Risk                                                                               |  |      | 45 | 
|                                   |  | Liquidity Risk/Access to Capital
    Markets                                              |  |      | 45 | 
|                                   |  | Government Regulation and Monetary
    Policy                                             |  |      | 46 | 
|                                   |  | Competition                                                                               |  |      | 46 | 
|                                   |  | Other Risks                                                                               |  |      | 46 | 
|                                   |  | Critical Accounting Policies                                                              |  |      | 46 | 
|Item 3.                            |  | Quantitative and Qualitative Disclosure about
    Market Risk                             |  |      | 47 | 
|Item 1.                            |  | Financial Statements (Unaudited)                                                          |  |      |    | 
|                                   |  | Consolidated Balance Sheets                                                               |  |      | 48 | 
|                                   |  | Consolidated Statements of Earnings                                                       |  |      | 50 | 
|                                   |  | Consolidated Statements of Shareholders
    Equity and Comprehensive Income              |  |      | 51 | 
|                                   |  | Consolidated Statements of Cash Flows                                                     |  |      | 52 | 
|                                   |  | Notes to Consolidated Financial Statements                                                |  |      | 53 | 
|Item 4.                            |  | Controls and Procedures                                                                   |  |      | 56 | 
|PART II.  OTHER
    INFORMATION   
|Item 4.                            |  | Submission of Matters to a Vote of Security
    Holders                                   |  |      | 57 | 
|Item 6.                            |  | Exhibits and Reports on Form 8-K                                                          |  |      | 57 | 

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FORWARD-LOOKING STATEMENTS

This Form 10-Q contains statements that may
be deemed to be forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include statements regarding our
projected financial condition and results of operations, plans,
objectives, future performance and business. Forward-looking
statements typically include the words anticipate,
believe, estimate, expect,
project, plan, forecast,
intend and other similar expressions. These
statements reflect our current views with respect to future
events and financial performance. They are subject to risks and
uncertainties that could cause future results to differ
materially from historical results or from the results
anticipated. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of
their dates or as of the date hereof if no other date is
identified. We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise. For further information
on our key operating risks, refer to Key Operating
Risks at page 44 and IndyMacs annual report on
Form 10-K for the year ended December 31, 2002.

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, 2003.






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







HIGHLIGHTS FOR THE QUARTER


Highlights for the three and six months ended
June 30, 2003 were as follows:

|                   |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |       |        | 
|------------------ | ------------------------------------------------------- | -------------------------------------------- | - | ---------------- | ------ | --------- | - | -------- | ------ | -------- | - | ------ | ------ |  | - | ------ | ------ |  | - | ----- | ------ | 
|                   |                                                         |                                              |   |                 
|                   |                                                         | Three Months Ended                           |   | Six Months Ended
|                   |                                                         |                                              |   |                 
|                   |                                                         | June 30,                                     |   | June 30,         |        | March 31, |   | June 30, |        | June 30,
|                   |                                                         | 2003                                         |   | 2002             |        | 2003      |   | 2003     |        | 2002    
|                   |                                                         |                                              |   |                  |        |           |   |          |        |         
|                   |                                                         |                                             
|                   |                                                         | (Dollars in millions, except per share data)
|Income Statement   |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |      
|                   | Net interest income after provision for loan
    losses |                                              | $ | 61               |        |           | $ | 46       |        |          | $ | 60     |        |  | $ | 121    |        |  | $ | 95    |       
|                   | Gain on sale of loans                                   |                                              |   | 102              |        |           |   | 71       |        |          |   | 84     |        |  |   | 186    |        |  |   | 149   |       
|                   | Other income                                            |                                              |   | 11               |        |           |   | 22       |        |          |   | 13     |        |  |   | 24     |        |  |   | 36    |       
|                   | Net revenues                                            |                                              |   | 173              |        |           |   | 139      |        |          |   | 157    |        |  |   | 330    |        |  |   | 280   |       
|                   | Operating expenses                                      |                                              |   | 105              |        |           |   | 81       |        |          |   | 96     |        |  |   | 200    |        |  |   | 160   |       
|                   | Net earnings                                            |                                              | $ | 41               |        |           | $ | 35       |        |          | $ | 37     |        |  | $ | 78     |        |  | $ | 71    |       
|Per Share Data     |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |      
|                   | Basic earnings per share                                |                                              | $ | 0.75             |        |           | $ | 0.58     |        |          | $ | 0.67   |        |  | $ | 1.43   |        |  | $ | 1.17  |       
|                   | Diluted earnings per share                              |                                              |   | 0.73             |        |           |   | 0.56     |        |          |   | 0.66   |        |  |   | 1.39   |        |  |   | 1.14  |       
|                   | Dividends declared per share                            |                                              |   | 0.10             |        |           |   | 0.00     |        |          |   | 0.10   |        |  |   | 0.20   |        |  |   | 0.00  |       
|                   | Book value per share at end of quarter                  |                                              |   | 16.48            |        |           |   | 15.06    |        |          |   | 15.99  |        |  |   | 16.48  |        |  |   | 15.06 |       
|                   | Closing price per share                                 |                                              | $ | 25.42            |        |           | $ | 22.68    |        |          | $ | 19.45  |        |  | $ | 25.42  |        |  | $ | 22.68 |       
|                   | Average Common Shares (in thousands)                    |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |       |       
|                   |                                                         | Basic                                        |   |                  | 55,015 |           |   |          | 60,050 |          |   |        | 54,827 |  |   |        | 54,922 |  |   |       | 60,139 | 
|                   |                                                         | Diluted                                      |   |                  | 56,711 |           |   |          | 61,763 |          |   |        | 55,979 |  |   |        | 56,345 |  |   |       | 61,903 | 
|Performance Ratios |                                                         |                                              |   |                  |        |           |   |          |        |          |   |        |        |  |   |        |        |  |   |      
|                   | Return on average equity (annualized)                   |                                              |   | 18.34            | %      |           |   | 15.74    | %      |          |   | 17.20  | %      |  |   | 17.79  | %      |  |   | 16.31 | %     
|                   | Return on average assets (annualized)                   |                                              |   | 1.52             | %      |           |   | 1.93     | %      |          |   | 1.49   | %      |  |   | 1.51   | %      |  |   | 1.94  | %     
|                   | Dividend payout ratio(1)                                |                                              |   | 13.70            | %      |           |   | 0.00     | %      |          |   | 15.15  | %      |  |   | 14.39  | %      |  |   | 0.00  | %     
|                   | Net interest income to pretax income                    |                                              |   | 98.74            | %      |           |   | 85.25    | %      |          |   | 103.29 | %      |  |   | 100.88 | %      |  |   | 86.27 | %     
|                   | Average cost of funds                                   |                                              |   | 2.94             | %      |           |   | 4.47     | %      |          |   | 3.20   | %      |  |   | 3.07   | %      |  |   | 4.55  | %     
|                   | Net interest margin                                     |                                              |   | 2.73             | %      |           |   | 3.04     | %      |          |   | 2.80   | %      |  |   | 2.76   | %      |  |   | 3.13  | %     
|                   | Efficiency ratio(2)                                     |                                              |   | 58               | %      |           |   | 57       | %      |          |   | 60     | %      |  |   | 59     | %      |  |   | 56    | %     
|                   | Capital to net revenue ratio(3)                         |                                              |   | 1.25             | %      |           |   | 1.55     | %      |          |   | 1.36   | %      |  |   | 1.30   | %      |  |   | 1.52  | %     

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|                                           |                                                                          |                                              |   |                  |   |           |   |          |   |          |   |        |   |  |   |        |   |  |   |        |  
|------------------------------------------ | ------------------------------------------------------------------------ | -------------------------------------------- | - | ---------------- | - | --------- | - | -------- | - | -------- | - | ------ | - |  | - | ------ | - |  | - | ------ | -
|                                           |                                                                          |                                              |   |                 
|                                           |                                                                          | Three Months Ended                           |   | Six Months Ended
|                                           |                                                                          |                                              |   |                 
|                                           |                                                                          | June 30,                                     |   | June 30,         |   | March 31, |   | June 30, |   | June 30,
|                                           |                                                                          | 2003                                         |   | 2002             |   | 2003      |   | 2003     |   | 2002    
|                                           |                                                                          |                                              |   |                  |   |           |   |          |   |         
|                                           |                                                                          |                                             
|                                           |                                                                          | (Dollars in millions, except per share data)
|Performance Ratios, Continued              |                                                                          |                                              |   |                  |   |           |   |          |   |          |   |        |   |  |   |        |   |  |   |       
|                                           | Capital adjusted efficiency ratio(4)                                     |                                              |   | 73               | % |           |   | 88       | % |          |   | 81     | % |  |   | 77     | % |  |   | 85     | %
|                                           | Operating expenses to loan production                                    |                                              |   | 1.28             | % |           |   | 1.68     | % |          |   | 1.45   | % |  |   | 1.36   | % |  |   | 1.78   | %
|Balance Sheet and Asset Quality
    Ratios |                                                                          |                                              |   |                  |   |           |   |          |   |          |   |        |   |  |   |        |   |  |   |       
|                                           | Debt to equity ratio(5)                                                  |                                              |   | 10.7:1           |   |           |   | 7.3:1    |   |          |   | 9.7:1  |   |  |   | 10.7:1 |   |  |   | 7.3:1  |  
|                                           | Core capital ratio(6)                                                    |                                              |   | 8.53             | % |           |   | 10.26    | % |          |   | 9.14   | % |  |   | 8.53   | % |  |   | 10.26  | %
|                                           | Risk-based capital ratio(6)                                              |                                              |   | 14.46            | % |           |   | 16.09    | % |          |   | 14.83  | % |  |   | 14.46  | % |  |   | 16.09  | %
|                                           | Non-performing assets to total assets                                    |                                              |   | 0.88             | % |           |   | 1.32     | % |          |   | 1.03   | % |  |   | 0.88   | % |  |   | 1.32   | %
|                                           | Allowance for loan losses to total loans held for
    investment         |                                              |   | 1.09             | % |           |   | 1.87     | % |          |   | 1.20   | % |  |   | 1.09   | % |  |   | 1.87   | %
|                                           | Allowance for loan losses and other reserves to
    non-performing loans |                                              |   | 97               | % |           |   | 77       | % |          |   | 83     | % |  |   | 97     | % |  |   | 77     | %
|                                           | Allowance for loan losses to annualized net
    charge-offs              |                                              |   | 176              | % |           |   | 305      | % |          |   | 347    | % |  |   | 233    | % |  |   | 284    | %
|                                           | Provision for loan losses to net charge-offs                             |                                              |   | 97.1             | % |           |   | 82.3     | % |          |   | 85.8   | % |  |   | 93.3   | % |  |   | 83.2   | %
|                                           | Provision to net charge-offs (core loan
    portfolio)(7)                |                                              |   | 119.7            | % |           |   | 198.3    | % |          |   | 115.9  | % |  |   | 118.8  | % |  |   | 152.7  | %
|Other Selected Items                       |                                                                          |                                              |   |                  |   |           |   |          |   |          |   |        |   |  |   |        |   |  |   |       
|                                           | Loans serviced(8)                                                        |                                              | $ | 32,974           |   |           | $ | 25,789   |   |          | $ | 30,944 |   |  | $ | 32,974 |   |  | $ | 25,789 |  
|                                           | Loan production(9)                                                       |                                              |   | 8,193            |   |           |   | 4,790    |   |          |   | 6,585  |   |  |   | 14,778 |   |  |   | 8,992  |  
|                                           | Pipeline of mortgage loans in process                                    |                                              |   | 6,929            |   |           |   | 3,722    |   |          |   | 6,044  |   |  |   | 6,929  |   |  |   | 3,722  |  
|                                           | Loans sold                                                               |                                              | $ | 6,336            |   |           | $ | 3,707    |   |          | $ | 5,524  |   |  | $ | 11,860 |   |  | $ | 7,973  |  



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|    |                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Dividends declared per common share as a
    percentage of diluted earnings per share.                                                                                                                                                                                                                                                                                                                       
|   
|(2) | Defined as operating expenses divided by net
    interest income and other income.                                                                                                                                                                                                                                                                                                                           
|   
|(3) | Average equity divided by net interest income and
    other income.                                                                                                                                                                                                                                                                                                                                          
|   
|(4) | Efficiency ratio multiplied by the capital to net
    revenue ratio.                                                                                                                                                                                                                                                                                                                                         
|   
|(5) | Debt includes deposits.                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(6) | IndyMac Bank, F.S.B. (excludes unencumbered cash
    at the Parent Company available for investment in IndyMac Bank).
    Risk based capital ratio is based on the regulatory standard
    risk weighting. With IndyMacs additional subprime risk
    weightings, the ratios are 13.22%, 15.10% and 13.76% for the
    three months ended June 30, 2003, June 30, 2002 and
    March 31, 2003, respectively.
|   
|(7) | Represents the total loan portfolio excluding
    amounts of loans from discontinued product lines.                                                                                                                                                                                                                                                                                                          
|   
|(8) | Represents entire servicing portfolio including
    IndyMac owned loans and loans subserviced for others on an
    interim basis.                                                                                                                                                                                                                                                                            
|   
|(9) | Includes newly originated commitments on
    construction loans.                                                                                                                                                                                                                                                                                                                                             






OVERALL RESULTS


IndyMacs overall results for the quarter
ended June 30, 2003 were characterized by record high
production of mortgage loans, high volume of loan sales and
strong earnings. IndyMac increased its loan production by 71% in
the second quarter of 2003 over the second quarter of 2002.
IndyMacs loan sales also increased significantly by 71%.
Partially offsetting the strong financial results in our
mortgage banking activities, the earnings related to our
servicing-related assets declined due to the increased levels of
prepayment activity, which resulted from interest rates at
45-year lows creating an environment of record refinancing of
mortgage loans throughout the industry. IndyMacs operating
expenses increased by 30% from the second quarter of 2002 as a
direct result of the growth in our mortgage loan production. The
ratio of operating expenses to loan production of 1.28% reflects
significant improvement in cost efficiency relative to the 1.68%
ratio during the second quarter of 2002, due to our lower fixed
cost structure platform and

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scalability of operations. Overall net earnings
for the quarter increased $7 million over the second
quarter of 2002, resulting in earnings per share
(EPS) growth of 30%.


IndyMacs performance this year
continues to be outstanding, with strong growth in production
and mortgage banking revenues partially offset, by design, with
lower returns in our investing activities. We have continued to
invest in mortgage loans, mortgage servicing rights and
mortgage-backed securities to enhance the diversification and
consistency of our revenue streams. In light of the recent
significant increase in long-term Treasury and mortgage rates,
the industry appears to be in for an abrupt return to a more
normal purchase-dominated mortgage market. Given that the
majority of our capital is devoted to investment portfolio
activities as opposed to mortgage origination activities and we
currently have $259 million of excess capital, we believe
we are reasonably well positioned for this likely challenging
transition, commented Mr. Michael W. Perry,
IndyMacs Chairman and Chief Executive Officer. While
recent interest rate volatility makes earnings forecasting more
difficult, we expect that earnings per share for the full year
2003 will range from $2.70 to $2.80 per share, reflecting growth
of 12% to 16% over 2002, concluded Mr. Perry.






OUR BUSINESS


IndyMac is structured to achieve synergies among
its operations and to enhance customer service. Operating
through its three main segments, IndyMac Mortgage Bank, IndyMac
Consumer Bank 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
channels in which each operates. IndyMac Mortgage Bank is
focused on providing 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 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 and mortgage servicing
rights (MSRs), the Investment Portfolio Group is a
core unit of the Bank and it 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 two
broad categories: mortgage banking activities and investing
activities. Both of these activities are performed to varying
degrees by each of our main segments as shown in the tables that
follow. Mortgage banking activities are characterized by high
asset turnover (the production and sale of mortgage loans) and
efficient utilization of capital but can be cyclical in nature
depending on interest rates. Revenues generated by mortgage
banking activities include gain on sale of mortgage loans, fee
income and net spread (interest) income during the period loans
are held pending sale. Investing 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 HELOC loans held for investment and mortgage servicing to
achieve greater balance between its mortgage banking activities
and its core investing activities. Over the long-term, we
believe that our investing activities stabilize IndyMacs
core income. In addition to its revenue contribution, the
Investment Portfolio Group performs the mortgage servicing
function, which includes default management. The mortgage
servicing function creates added opportunities to retain
customers when the interest rate environment makes it attractive
for them to refinance and cross-market customers with other
Company products. Default management, which includes the
processes of collections, foreclosures, bankruptcies, claims,
and foreclosed assets management, enables IndyMac to proactively
manage its credit risk.

The following tables summarize the Companys
financial results for the three months ended June 30, 2003,
illustrating the revenues earned in its mortgage banking
activities and investing activities by each of its divisions.
The profitability of each operating segment is measured on a
fully-leveraged basis after allocating capital based on
regulatory capital rules. The Company uses a 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,
repricing frequencies and financing liquidities of the
segments assets. The Retail Bank division within the
Consumer Banking Group receives 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 Treasury unit. Corporate overhead costs related
to managing the Company as a whole are not allocated to the
operating segments.

4



---



##### Table of Contents



The following table presents the segment
financial highlights for the three months ended June 30,
2003:

|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |         |        |        |        | 
|--------------------------------------- | ------------------ | ------------------------- | ------------------- | ---------- | ------ | ------ | ------- | ----- | ----- | ----- | --------- | ------ | ----- | ------ | ------- | ----- | ----- | ----- | --------- | ------- | ------ | ------ | ------ | 
|                                        |                    |                          
|                                        |                    | Relationship Businesses 
|                                        |                    | IndyMac Mortgage Bank    
|                                        |                    |                          
|                                        |                    | B2B                       |                     | B2R        |        | HCL    |         | HBD   |       | Total
|                                        |                    |                           |                     |            |        |        |         |       |       |      
|                                        |                    |                          
|                                        |                    | (Dollars in thousands)   
|Operating Results                       |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Mortgage Banking Activities             |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Net interest income                     |                    | $                         | 24,060              |            |        | $      | 954     |       |       | $     | 2,903     |        |       | $      | 482     |       |       | $     | 28,399    |        
|Gain on sale of loans                   |                    |                           | 59,070              |            |        |        | 3,583   |       |       |       | 4,197     |        |       |        | 1,439   |       |       |       | 68,289    |        
|Other income                            |                    |                           | 9,389               |            |        |        | 654     |       |       |       | 1,312     |        |       |        | 173     |       |       |       | 11,528    |        
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        | Net revenues       |                           |                     | 92,519     |        |        |         | 5,191 |       |       |           | 8,412  |       |        |         | 2,094 |       |       |           | 108,216 |       
|                                        | Operating expenses |                           |                     | 31,885     |        |        |         | 4,117 |       |       |           | 418    |       |        |         | 840   |       |       |           | 37,260  |       
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        |                    | Pretax income             |                     |            | 60,634 |        |         |       | 1,074 |       |           |        | 7,994 |        |         |       | 1,254 |       |           |         | 70,956 |       
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Investing Activities                    |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Net interest income                     |                    |                           |                    |            |        |        |        |       |       |       | 9,247     |        |       |        | 7,654   |       |       |       | 16,901    |        
|Provision for loan losses               |                    |                           |                    |            |        |        |        |       |       |       | (355      | )      |       |        | (312    | )     |       |       | (667      | )      
|Service fee income                      |                    |                           |                    |            |        |        |        |       |       |       |          |        |       |        |        |       |       |       |          |        
|Loss on sale of securities              |                    |                           |                    |            |        |        |        |       |       |       |          |        |       |        |        |       |       |       |          |        
|Other income                            |                    |                           |                    |            |        |        |        |       |       |       | 1,323     |        |       |        | 180     |       |       |       | 1,503     |        
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        | Net revenues       |                           |                     |           |        |        |         |      |       |       |           | 10,215 |       |        |         | 7,522 |       |       |           | 17,737  |       
|                                        | Operating expenses |                           |                     |           |        |        |         |      |       |       |           | 6,525  |       |        |         | 1,252 |       |       |           | 7,777   |       
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        |                    | Pretax income             |                     |            |       |        |         |       |      |       |           |        | 3,690 |        |         |       | 6,270 |       |           |         | 9,960  |       
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Financing and Other Activities          |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Net interest income                     |                    |                           |                    |            |        |        |        |       |       |       |          |        |       |        |        |       |       |       |          |        
|Other income                            |                    |                           |                    |            |        |        |        |       |       |       |          |        |       |        |        |       |       |       |          |        
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        | Net revenues       |                           |                     |           |        |        |         |      |       |       |           |       |       |        |         |      |       |       |           |        |       
|                                        | Operating expenses |                           |                     |           |        |        |         |      |       |       |           |       |       |        |         |      |       |       |           |        |       
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        |                    | Pretax income             |                     |            |       |        |         |       |      |       |           |        |      |        |         |       |      |       |           |         |       |       
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        |                    |                           | Total pretax income |            |        | 60,634 |         |       |       | 1,074 |           |        |       | 11,684 |         |       |       | 7,524 |           |         |        | 80,916 |       
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|                                        |                    |                           |                     | Net income |        | $      | 36,684  |       |       | $     | 650       |        |       | $      | 7,069   |       |       | $     | 4,552     |         |        | $      | 48,955 | 
|                                        |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Ratios                                  |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Percentage of assets                    |                    |                           | 21                  | %          |        |        | 1       | %     |       |       | 10        | %      |       |        | 6       | %     |       |       | 38        | %      
|Percentage of total revenue             |                    |                           | 53                  | %          |        |        | 3       | %     |       |       | 11        | %      |       |        | 6       | %     |       |       | 73        | %      
|Percentage of pretax income             |                    |                           | 89                  | %          |        |        | 1       | %     |       |       | 17        | %      |       |        | 11      | %     |       |       | 118       | %      
|Balance Sheet Data                      |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Average interest-earning assets         |                    | $                         | 2,145,098           |            |        | $      | 94,683  |       |       | $     | 1,143,691 |        |       | $      | 664,504 |       |       | $     | 4,047,976 |        
|Average total assets                    |                    | $                         | 2,245,769           |            |        | $      | 100,804 |       |       | $     | 1,150,037 |        |       | $      | 668,327 |       |       | $     | 4,164,937 |        
|Allocated capital                       |                    | $                         | 139,148             |            |        | $      | 5,773   |       |       | $     | 62,518    |        |       | $      | 69,570  |       |       | $     | 277,009   |        
|Allocated capital/ total average assets |                    |                           | 6.20                | %          |        |        | 5.73    | %     |       |       | 5.44      | %      |       |        | 10.41   | %     |       |       | 6.65      | %      
|Loans Produced                          |                    | $                         | 4,987,150           |            |        | $      | 273,996 |       |       | $     | 747,445   |        |       | $      | 354,901 |       |       | $     | 6,363,492 |        
|Purchase mortgages                      |                    |                           | 28                  | %          |        |        | 31      | %     |       |       | 99        | %      |       |        | 70      | %     |       |       | 35        | %      
|Cash out refinance mortgages            |                    |                           | 46                  | %          |        |        | 34      | %     |       |       | 0         | %      |       |        | 16      | %     |       |       | 39        | %      
|Rate and term refinance mortgages       |                    |                           | 26                  | %          |        |        | 35      | %     |       |       | 1         | %      |       |        | 14      | %     |       |       | 26        | %      
|Performance Ratios                      |                    |                           |                     |            |        |        |         |       |       |       |           |        |       |        |         |       |       |       |           |        
|Return on equity                        |                    |                           | 106                 | %          |        |        | 45      | %     |       |       | 45        | %      |       |        | 26      | %     |       |       | 71        | %      
|Return on assets                        |                    |                           | 6.55                | %          |        |        | 2.59    | %     |       |       | 2.47      | %      |       |        | 2.73    | %     |       |       | 4.71      | %      
|Net interest margin                     |                    |                           | 4.50                | %          |        |        | 4.04    | %     |       |       | 4.26      | %      |       |        | 4.91    | %     |       |       | 4.49      | %      
|Efficiency ratio                        |                    |                           | 34                  | %          |        |        | 79      | %     |       |       | 37        | %      |       |        | 21      | %     |       |       | 36        | %      
|Capital adjusted efficiency ratio       |                    |                           | 13                  | %          |        |        | 22      | %     |       |       | 30        | %      |       |        | 37      | %     |       |       | 19        | %      
|Average FTE                             |                    |                           | 1,231               |            |        |        | 158     |       |       |       | 204       |        |       |        | 101     |       |       |       | 1,694     |        

|                                |  |                                    
|------------------------------- |  | -----------------------------------
|                               
|IndyMac Mortgage Bank Divisions
|                               
|B2B                             |  | Business-to-Business division.     
|B2R                             |  | Business-to-Realtor division.      
|HCL                             |  | Home Construction Lending division.
|HBD                             |  | Homebuilder division.              

5



---



##### Table of Contents



The following table details the segment financial
highlights for the three months ended June 30, 2003,
continued:

|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |        |         |       |       | 
|--------------------------------------- | ------------------ | ---------------------------- | ------------------- | ---------- | ------ | ------ | ------- | ---------- | ----- | ----- | ------- | ----- | ------ | ------ | --------- | ------ | ------ | ------ | --------- | ------ | ------- | ----- | ----- | 
|                                        |                    |                              |                     |           
|                                        |                    | Consumer Direct Businesses  |                     |           
|                                        |                    | IndyMac Consumer Bank        |                     |           
|                                        |                    |                              |                     |           
|                                        |                    |                              |                     |            |        |        |         | Investment
|                                        |                    |                              |                     | Retail     |        |        |         | Portfolio 
|                                        |                    | B2C                          |                     | HELOC      |        | Bank   |         | Total      |       | Group
|                                        |                    |                              |                     |            |        |        |         |            |       |      
|                                        |                    |                             
|                                        |                    | (Dollars in thousands)      
|Operating Results                       |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Mortgage Banking Activities             |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Net interest income                     |                    | $                            | 5,764               |            |        | $      |        |            |       | $     | 311     |       |        | $      | 6,075     |        |        | $      | 4,730     |       
|Gain on sale of loans                   |                    |                              | 28,277              |            |        |        |        |            |       |       | 1,507   |       |        |        | 29,784    |        |        |        | 13,826    |       
|Other income                            |                    |                              | 6,259               |            |        |        |        |            |       |       | 267     |       |        |        | 6,526     |        |        |        |          |       
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        | Net revenues       |                              |                     | 40,300     |        |        |         |           |       |       |         | 2,085 |        |        |           | 42,385 |        |        |           | 18,556 |        
|                                        | Operating expenses |                              |                     | 17,511     |        |        |         |           |       |       |         | 722   |        |        |           | 18,233 |        |        |           | 186    |        
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        |                    | Pretax income                |                     |            | 22,789 |        |         |            |      |       |         |       | 1,363  |        |           |        | 24,152 |        |           |        | 18,370  |      
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Investing Activities                    |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Net interest income                     |                    |                              |                    |            |        |        | 3,135   |            |       |       |        |       |        |        | 3,135     |        |        |        | 14,292    |       
|Provision for loan losses               |                    |                              |                    |            |        |        | (1,373  | )          |       |       |        |       |        |        | (1,373    | )      |        |        | (4,853    | )     
|Service fee income                      |                    |                              |                    |            |        |        |        |            |       |       |        |       |        |        |          |        |        |        | (2,122    | )     
|Loss on sale of securities              |                    |                              |                    |            |        |        |        |            |       |       |        |       |        |        |          |        |        |        | (10,002   | )     
|Other income                            |                    |                              |                    |            |        |        | 389     |            |       |       |        |       |        |        | 389       |        |        |        | 764       |       
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        | Net revenues       |                              |                     |           |        |        |         | 2,151      |       |       |         |      |        |        |           | 2,151  |        |        |           | (1,921 | )      
|                                        | Operating expenses |                              |                     |           |        |        |         | 838        |       |       |         |      |        |        |           | 838    |        |        |           | 10,570 |        
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        |                    | Pretax income                |                     |            |       |        |         |            | 1,313 |       |         |       |       |        |           |        | 1,313  |        |           |        | (12,491 | )    
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Financing and Other Activities          |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Net interest income                     |                    |                              |                    |            |        |        |        |            |       |       | 2,281   |       |        |        | 2,281     |        |        |        |          |       
|Other income                            |                    |                              |                    |            |        |        |        |            |       |       | 471     |       |        |        | 471       |        |        |        |          |       
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        | Net revenues       |                              |                     |           |        |        |         |           |       |       |         | 2,752 |        |        |           | 2,752  |        |        |           |       |        
|                                        | Operating expenses |                              |                     |           |        |        |         |           |       |       |         | 5,156 |        |        |           | 5,156  |        |        |           |       |        
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        |                    | Pretax income                |                     |            |       |        |         |            |      |       |         |       | (2,404 | )      |           |        | (2,404 | )      |           |        |        |      
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        |                    |                              | Total pretax income |            |        | 22,789 |         |            |       | 1,313 |         |       |        | (1,041 | )         |        |        | 23,061 |           |        |         | 5,879 |      
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|                                        |                    |                              |                     | Net income |        | $      | 13,787  |            |       | $     | 794     |       |        | $      | (630      | )      |        | $      | 13,951    |        |         | $     | 3,557 | 
|                                        |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Ratios                                  |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Percentage of assets                    |                    |                              | 5                   | %          |        |        | 4       | %          |       |       | 1       | %     |        |        | 10        | %      |        |        | 48        | %     
|Percentage of total revenue             |                    |                              | 23                  | %          |        |        | 1       | %          |       |       | 3       | %     |        |        | 27        | %      |        |        | 10        | %     
|Percentage of pretax income             |                    |                              | 33                  | %          |        |        | 2       | %          |       |       | (2      | )%    |        |        | 33        | %      |        |        | 9         | %     
|Balance Sheet Data                      |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Average interest-earning assets         |                    | $                            | 554,588             |            |        | $      | 434,741 |            |       | $     | 46,912  |       |        | $      | 1,036,241 |        |        | $      | 4,580,606 |       
|Average total assets                    |                    | $                            | 586,872             |            |        | $      | 442,042 |            |       | $     | 76,320  |       |        | $      | 1,105,234 |        |        | $      | 5,208,573 |       
|Allocated capital                       |                    | $                            | 34,024              |            |        | $      | 42,878  |            |       | $     | 7,929   |       |        | $      | 84,831    |        |        | $      | 390,295   |       
|Allocated capital/ total average assets |                    |                              | 5.80                | %          |        |        | 9.70    | %          |       |       | 10.39   | %     |        |        | 7.68      | %      |        |        | 7.49      | %     
|Loans Produced(1)                       |                    | $                            | 1,488,027           |            |        | $      | 228,957 |            |       | $     | 112,779 |       |        | $      | 1,829,763 |        |        |        |          |       
|Purchase mortgages                      |                    |                              | 4                   | %          |        |        | N/A     |            |       |       | 18      | %     |        |        | 5         | %      |        |        | N/A       |       
|Cash out refinance mortgages            |                    |                              | 43                  | %          |        |        | N/A     |            |       |       | 32      | %     |        |        | 42        | %      |        |        | N/A       |       
|Rate and term refinance mortgages       |                    |                              | 53                  | %          |        |        | N/A     |            |       |       | 50      | %     |        |        | 53        | %      |        |        | N/A       |       
|Performance Ratios                      |                    |                              |                     |            |        |        |         |            |       |       |         |       |        |        |           |        |        |        |           |       
|Return on equity                        |                    |                              | 163                 | %          |        |        | 7       | %          |       |       | N/A     |       |        |        | 66        | %      |        |        | 4         | %     
|Return on assets                        |                    |                              | 9.42                | %          |        |        | 0.72    | %          |       |       | N/A     |       |        |        | 5.06      | %      |        |        | 0.27      | %     
|Net interest margin                     |                    |                              | 4.17                | %          |        |        | 2.89    | %          |       |       | N/A     |       |        |        | 4.45      | %      |        |        | 1.67      | %     
|Efficiency ratio                        |                    |                              | 43                  | %          |        |        | 24      | %          |       |       | N/A     |       |        |        | 50        | %      |        |        | 50        | %     
|Capital adjusted efficiency ratio       |                    |                              | 9                   | %          |        |        | 72      | %          |       |       | N/A     |       |        |        | 22        | %      |        |        | 227       | %     
|Average FTE                             |                    |                              | 622                 |            |        |        | 11      |            |       |       | 219     |       |        |        | 852       |        |        |        | 430       |       

|                                |  |                                     
|------------------------------- |  | ------------------------------------
|                                |  |                                     
|                               
|IndyMac Consumer Bank Divisions
|                               
|B2C                             |  | Business-to-Consumer division.      
|HELOC                           |  | Home Equity Line of Credit division.
|Retail Bank                     |  | Retail Bank division.               



|    |                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All HELOC products produced by the business units
    during the second quarter of 2003 were consolidated into the
    HELOC division for segment reporting.

6



---



##### Table of Contents



The following table details the segment financial
highlights for the three months ended June 30, 2003,
continued:

|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |         |         |        |        | 
|--------------------------------------- | ------------------ | ---------------------- | ------------------- | ---------- | ------- | --------- | ---------- | ------------ | ------- | ------ | ------- | ------ | ------- | ------- | ------- | ------ | ------ | ------ | ---------- | ------- | ------- | ------ | ------ | 
|                                        |                    |                        |                     |            |         |           |            |              |         |       
|                                        |                    | Treasury               |                     |            |         | Corporate |            |              |         |       
|                                        |                    | Group(2)               |                     | Subtotal   |         | Overhead  |            | Eliminations |         | Total 
|                                        |                    |                        |                     |            |         |           |            |              |         |       
|                                        |                    |                       
|                                        |                    | (Dollars in thousands)
|Operating Results                       |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Mortgage Banking Activities             |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Net interest income                     |                    | $                      |                    |            |         | $         | 39,204     |              |         | $      |        |        |         | $       |        |        |        | $      | 39,204     |        
|Gain on sale of loans                   |                    |                        |                    |            |         |           | 111,899    |              |         |        |        |        |         |         | (9,753  | )      |        |        | 102,146    |        
|Other income                            |                    |                        |                    |            |         |           | 18,054     |              |         |        |        |        |         |         | (43     | )      |        |        | 18,011     |        
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        | Net revenues       |                        |                     |           |         |           |            | 169,157      |         |        |         |       |         |         |         | (9,796 | )      |        |            | 159,361 |        
|                                        | Operating expenses |                        |                     |           |         |           |            | 55,679       |         |        |         |       |         |         |         |       |        |        |            | 55,679  |        
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        |                    | Pretax income          |                     |            |        |           |            |              | 113,478 |        |         |        |        |         |         |        | (9,796 | )      |            |         | 103,682 |       
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Investing Activities                    |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Net interest income                     |                    |                        |                    |            |         |           | 34,328     |              |         |        |        |        |         |         | 1,238   |        |        |        | 35,566     |        
|Provision for loan losses               |                    |                        |                    |            |         |           | (6,893     | )            |         |        |        |        |         |         | (7      | )      |        |        | (6,900     | )      
|Service fee income                      |                    |                        |                    |            |         |           | (2,122     | )            |         |        |        |        |         |         | 721     |        |        |        | (1,401     | )      
|Loss on sale of securities              |                    |                        |                    |            |         |           | (10,002    | )            |         |        |        |        |         |         | 744     |        |        |        | (9,258     | )      
|Other income                            |                    |                        |                    |            |         |           | 2,656      |              |         |        | 105     |        |         |         |        |        |        |        | 2,761      |        
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        | Net revenues       |                        |                     |           |         |           |            | 17,967       |         |        |         | 105    |         |         |         | 2,696  |        |        |            | 20,768  |        
|                                        | Operating expenses |                        |                     |           |         |           |            | 19,185       |         |        |         |       |         |         |         |       |        |        |            | 19,185  |        
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        |                    | Pretax income          |                     |            |        |           |            |              | (1,218  | )      |         |        | 105     |         |         |        | 2,696  |        |            |         | 1,583   |       
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Financing and Other Activities          |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Net interest income                     |                    |                        | (9,572              | )          |         |           | (7,291     | )            |         |        | 36      |        |         |         |        |        |        |        | (7,255     | )      
|Other income                            |                    |                        |                    |            |         |           | 471        |              |         |        |        |        |         |         | 8       |        |        |        | 479        |        
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        | Net revenues       |                        |                     | (9,572     | )       |           |            | (6,820       | )       |        |         | 36     |         |         |         | 8      |        |        |            | (6,776  | )      
|                                        | Operating expenses |                        |                     | 902        |         |           |            | 6,058        |         |        |         | 24,053 |         |         |         |       |        |        |            | 30,111  |        
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        |                    | Pretax income          |                     |            | (10,474 | )         |            |              | (12,878 | )      |         |        | (24,017 | )       |         |        | 8      |        |            |         | (36,887 | )     
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        |                    |                        | Total pretax income |            |         | (10,474   | )          |              |         | 99,382 |         |        |         | (23,912 | )       |        |        | (7,092 | )          |         |         | 68,378 |       
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|                                        |                    |                        |                     | Net income |         | $         | (6,337     | )            |         | $      | 60,126  |        |         | $       | (14,467 | )      |        | $      | (4,290     | )       |         | $      | 41,369 | 
|                                        |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Ratios                                  |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Percentage of assets                    |                    |                        | 3                   | %          |         |           | 99         | %            |         |        | 1       | %      |         |         | 0       | %      |        |        | 100        | %      
|Percentage of total revenue             |                    |                        | (6                  | )%         |         |           | 104        | %            |         |        | 0       | %      |         |         | (4      | )%     |        |        | 100        | %      
|Percentage of pretax income             |                    |                        | (15                 | )%         |         |           | 145        | %            |         |        | (35     | )%     |         |         | (10     | )%     |        |        | 100        | %      
|Balance Sheet Data                      |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Average interest-earning assets         |                    | $                      | 275,276             |            |         | $         | 9,940,099  |              |         | $      | (31,062 | )      |         |         |        |        |        | $      | 9,909,037  |        
|Average total assets                    |                    | $                      | 277,640             |            |         | $         | 10,756,384 |              |         | $      | 125,340 |        |         |         |        |        |        | $      | 10,881,724 |        
|Allocated capital                       |                    | $                      | 13,764              |            |         | $         | 765,899    |              |         | $      | 138,652 |        |         |         |        |        |        | $      | 904,551    |        
|Allocated capital/ total average assets |                    |                        | 4.96                | %          |         |           | 7.12       | %            |         |        | 110.62  | %      |         |         |        |        |        |        | 8.31       | %      
|Loans Produced                          |                    |                        |                    |            |         | $         | 8,193,255  |              |         |        |        |        |         |         |        |        |        | $      | 8,193,255  |        
|Purchase mortgages                      |                    |                        | N/A                 |            |         |           | N/A        |              |         |        | N/A     |        |         |         | N/A     |        |        |        | 32         | %      
|Cash out refinance mortgages            |                    |                        | N/A                 |            |         |           | N/A        |              |         |        | N/A     |        |         |         | N/A     |        |        |        | 38         | %      
|Rate and term refinance mortgages       |                    |                        | N/A                 |            |         |           | N/A        |              |         |        | N/A     |        |         |         | N/A     |        |        |        | 30         | %      
|Performance Ratios                      |                    |                        |                     |            |         |           |            |              |         |        |         |        |         |         |         |        |        |        |            |        
|Return on equity                        |                    |                        | N/A                 |            |         |           | 31         | %            |         |        | N/A     |        |         |         | N/A     |        |        |        | 18         | %      
|Return on assets                        |                    |                        | N/A                 |            |         |           | 2.24       | %            |         |        | N/A     |        |         |         | N/A     |        |        |        | 1.52       | %      
|Net interest margin                     |                    |                        | N/A                 |            |         |           | 2.67       | %            |         |        | N/A     |        |         |         | N/A     |        |        |        | 2.73       | %      
|Efficiency ratio                        |                    |                        | N/A                 |            |         |           | 43         | %            |         |        | N/A     |        |         |         | N/A     |        |        |        | 58         | %      
|Capital adjusted efficiency ratio       |                    |                        | N/A                 |            |         |           | 44         | %            |         |        | N/A     |        |         |         | N/A     |        |        |        | 73         | %      
|Average FTE                             |                    |                        | 23                  |            |         |           | 2,999      |              |         |        | 506     |        |         |         | N/A     |        |        |        | 3,505      |        



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | During the three months ended June 30, 2003,
    the Treasury Group reported net interest expense of
    $9.6 million. These amounts include the interest expense
    related to the trust preferred securities issued by the Company
    in November 2001, which is not allocated to the business
    units. Additionally, the net expense in Treasury reflects fixed
    rate liabilities assumed in prior years with maturities longer
    than the related assets and the subsequent decline in net
    interest income as interest rates fell. As these liabilities
    continue to mature, the Company expects the loss in Treasury to
    decline further and ultimately approach $0.

7



---



##### Table of Contents



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

|                                  |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|--------------------------------- |  | ------------------------- | ------ | --- |  | --- | ----- | --- |  | -------- | ----- | -- |  | - | ----- | -- |  | - | ------ | --
|                                  |  |                          
|                                  |  | Relationship Businesses 
|                                  |  | IndyMac Mortgage Bank    
|                                  |  |                          
|Three Months Ended                |  |                           |        |     |  |     |       |     |  |         
|June 30, 2003                     |  | B2B                       |        | B2R |  | HCL |       | HBD |  | Total(1)
|                                  |  |                           |        |     |  |     |       |     |  |         
|                                  |  |                          
|                                  |  | (Dollars in thousands)   
|Mortgage Banking Activities       |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|Q2 03  Pretax income             |  | $                         | 60,634 |     |  | $   | 1,074 |     |  | $        | 7,994 |    |  | $ | 1,254 |    |  | $ | 70,956 |   
|Q1 03  Pretax income             |  |                           | 56,620 |     |  |     | (98   | )   |  |          | 8,915 |    |  |   | 919   |    |  |   | 66,356 |   
|Annualized Variance Percent       |  |                           | 28     | %   |  |     | NM    |     |  |          | (41   | )% |  |   | 146   | %  |  |   | 28     | % 
|Q2 02  Pretax income             |  |                           | 47,890 |     |  |     | (254  | )   |  |          | 5,366 |    |  |   | (467  | )  |  |   | 52,535 |   
|Variance Percent                  |  |                           | 27     | %   |  |     | NM    |     |  |          | 49    | %  |  |   | NM    |    |  |   | 35     | % 
|Investing Activities              |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|Q2 03  Pretax income             |  |                           |       |     |  |     |      |     |  |          | 3,690 |    |  |   | 6,270 |    |  |   | 9,960  |   
|Q1 03  Pretax income             |  |                           |       |     |  |     |      |     |  |          | 3,388 |    |  |   | 5,516 |    |  |   | 8,904  |   
|Annualized Variance Percent       |  |                           | NM     |     |  |     | NM    |     |  |          | 36    | %  |  |   | 55    | %  |  |   | 47     | % 
|Q2 02  Pretax income             |  |                           |       |     |  |     |      |     |  |          | 6,202 |    |  |   | 7,284 |    |  |   | 13,486 |   
|Variance Percent                  |  |                           | NM     |     |  |     | NM    |     |  |          | (41   | )% |  |   | (14   | )% |  |   | (26    | )%
|Financing and Other Activities    |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|Q2 03  Pretax income             |  |                           |       |     |  |     |      |     |  |          |      |    |  |   |      |    |  |   |       |   
|Q1 03  Pretax income             |  |                           |       |     |  |     |      |     |  |          |      |    |  |   |      |    |  |   |       |   
|Q2 02  Pretax income             |  |                           |       |     |  |     |      |     |  |          |      |    |  |   |      |    |  |   |       |   
|Net Income                        |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|Q2 03  Net Income                |  |                           | 36,684 |     |  |     | 650   |     |  |          | 7,069 |    |  |   | 4,552 |    |  |   | 48,955 |   
|Q1 03  Net Income                |  |                           | 34,254 |     |  |     | (59   | )   |  |          | 7,443 |    |  |   | 3,893 |    |  |   | 45,531 |   
|Annualized Variance Percent       |  |                           | 28     | %   |  |     | NM    |     |  |          | (20   | )% |  |   | 68    | %  |  |   | 30     | % 
|Q2 02  Net Income                |  |                           | 28,686 |     |  |     | (152  | )   |  |          | 6,929 |    |  |   | 4,083 |    |  |   | 39,546 |   
|Variance Percent                  |  |                           | 28     | %   |  |     | NM    |     |  |          | 2     | %  |  |   | 11    | %  |  |   | 24     | % 
|Performance Ratios                |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|Q2 03                             |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|ROE                               |  |                           | 106    | %   |  |     | 45    | %   |  |          | 45    | %  |  |   | 26    | %  |  |   | 71     | % 
|ROA                               |  |                           | 6.55   | %   |  |     | 2.59  | %   |  |          | 2.47  | %  |  |   | 2.73  | %  |  |   | 4.71   | % 
|NIM                               |  |                           | 4.50   | %   |  |     | 4.04  | %   |  |          | 4.26  | %  |  |   | 4.91  | %  |  |   | 4.49   | % 
|Efficiency ratio                  |  |                           | 34     | %   |  |     | 79    | %   |  |          | 37    | %  |  |   | 21    | %  |  |   | 36     | % 
|Capital adjusted efficiency ratio |  |                           | 13     | %   |  |     | 22    | %   |  |          | 30    | %  |  |   | 37    | %  |  |   | 19     | % 
|Average FTE                       |  |                           | 1,231  |     |  |     | 158   |     |  |          | 204   |    |  |   | 101   |    |  |   | 1,694  |   
|Q1 03                             |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|ROE                               |  |                           | 113    | %   |  |     | (4    | )%  |  |          | 50    | %  |  |   | 23    | %  |  |   | 71     | % 
|ROA                               |  |                           | 7.10   | %   |  |     | (0.25 | )%  |  |          | 2.70  | %  |  |   | 2.35  | %  |  |   | 4.81   | % 
|NIM                               |  |                           | 4.86   | %   |  |     | 4.10  | %   |  |          | 4.39  | %  |  |   | 4.94  | %  |  |   | 4.71   | % 
|Efficiency ratio                  |  |                           | 32     | %   |  |     | 102   | %   |  |          | 33    | %  |  |   | 33    | %  |  |   | 35     | % 
|Capital adjusted efficiency ratio |  |                           | 12     | %   |  |     | 34    | %   |  |          | 26    | %  |  |   | 57    | %  |  |   | 19     | % 
|Average FTE                       |  |                           | 1,073  |     |  |     | 145   |     |  |          | 211   |    |  |   | 90    |    |  |   | 1,519  |   
|Q2 02                             |  |                           |        |     |  |     |       |     |  |          |       |    |  |   |       |    |  |   |        |   
|ROE                               |  |                           | 164    | %   |  |     | (26   | )%  |  |          | 51    | %  |  |   | 19    | %  |  |   | 75     | % 
|ROA                               |  |                           | 9.16   | %   |  |     | (1.81 | )%  |  |          | 2.84  | %  |  |   | 2.19  | %  |  |   | 5.26   | % 
|NIM                               |  |                           | 4.90   | %   |  |     | 4.24  | %   |  |          | 4.90  | %  |  |   | 5.18  | %  |  |   | 4.96   | % 
|Efficiency ratio                  |  |                           | 34     | %   |  |     | 112   | %   |  |          | 30    | %  |  |   | 33    | %  |  |   | 35     | % 
|Capital adjusted efficiency ratio |  |                           | 8      | %   |  |     | 30    | %   |  |          | 23    | %  |  |   | 68    | %  |  |   | 18     | % 
|Average FTE                       |  |                           | 1,022  |     |  |     | 89    |     |  |          | 163   |    |  |   | 95    |    |  |   | 1,369  |   



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Mortgage Bank segments net income, from
    both mortgage banking and investing activities, grew by
    $3.4 million, or 30%, during the second quarter of 2003
    versus the first quarter of this year. This increase was
    primarily related to higher levels of mortgages produced and
    sold. Compared with the second quarter of 2002, the Mortgage
    Bank segments net income increased $9.4 million or
    24% which is also due to the higher levels of mortgages produced
    and sold, partially offset by the decline in the earnings
    related to the portfolio lending activities of its construction
    divisions as margins have compressed with the decline in market
    interest rates.

8



---



##### Table of Contents



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

|                                  |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|--------------------------------- |  | ---------------------------- | ------ | ------------ |  | -------- | ----- | --------- |  | -------- | ------ | -- |  | - | ------ | - |  | - | ------- | --
|                                  |  |                              |        |             
|                                  |  | Consumer Direct Businesses  |        |             
|                                  |  | IndyMac Consumer Bank        |        |             
|                                  |  |                              |        | Investment  
|                                  |  |                              |        | Retail Bank/ |  |          |       | Portfolio
|                                  |  | B2C                          |        | HELOC        |  | Deposits |       | Total(2)  |  | Group(3)
|                                  |  |                              |        |              |  |          |       |           |  |         
|                                  |  |                             
|                                  |  | (Dollars in thousands)      
|Mortgage Banking Activities       |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|Q2 03  Pretax income             |  | $                            | 22,789 |              |  | $        |      |           |  | $        | 1,363  |    |  | $ | 24,152 |   |  | $ | 18,370  |   
|Q1 03  Pretax income             |  |                              | 16,553 |              |  |          |      |           |  |          | 701    |    |  |   | 17,254 |   |  |   | 7,454   |   
|Annualized Variance Percent       |  |                              | 151    | %            |  |          | NM    |           |  |          | 378    | %  |  |   | 160    | % |  |   | 586     | % 
|Q2 02  Pretax income             |  |                              | 8,155  |              |  |          |      |           |  |          | 247    |    |  |   | 8,402  |   |  |   | 610     |   
|Variance Percent                  |  |                              | 179    | %            |  |          | NM    |           |  |          | 452    | %  |  |   | 187    | % |  |   | 2,911   | % 
|Investing Activities              |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|Q2 03  Pretax income             |  |                              |       |              |  |          | 1,313 |           |  |          |       |    |  |   | 1,313  |   |  |   | (12,491 | ) 
|Q1 03  Pretax income             |  |                              |       |              |  |          | 1,060 |           |  |          |       |    |  |   | 1,060  |   |  |   | 3,290   |   
|Annualized Variance Percent       |  |                              | NM     |              |  |          | 95    | %         |  |          | NM     |    |  |   | 95     | % |  |   | (1,919  | )%
|Q2 02  Pretax income             |  |                              |       |              |  |          | 327   |           |  |          |       |    |  |   | 327    |   |  |   | 16,545  |   
|Variance Percent                  |  |                              | NM     |              |  |          | 302   | %         |  |          | NM     |    |  |   | 302    | % |  |   | (175    | )%
|Financing and Other Activities    |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|Q2 03  Pretax income             |  |                              |       |              |  |          |      |           |  |          | (2,404 | )  |  |   | (2,404 | ) |  |   |        |   
|Q1 03  Pretax income             |  |                              |       |              |  |          |      |           |  |          | (2,045 | )  |  |   | (2,045 | ) |  |   |        |   
|Q2 02  Pretax income             |  |                              |       |              |  |          |      |           |  |          | (28    | )  |  |   | (28    | ) |  |   |        |   
|Net Income                        |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|Q2 03  Net Income                |  |                              | 13,787 |              |  |          | 794   |           |  |          | (630   | )  |  |   | 13,951 |   |  |   | 3,557   |   
|Q1 03  Net Income                |  |                              | 10,015 |              |  |          | 641   |           |  |          | (813   | )  |  |   | 9,843  |   |  |   | 6,499   |   
|Annualized Variance Percent       |  |                              | 151    | %            |  |          | 95    | %         |  |          | (90    | )% |  |   | 167    | % |  |   | (181    | )%
|Q2 02  Net Income                |  |                              | 4,885  |              |  |          | 196   |           |  |          | 131    |    |  |   | 5,212  |   |  |   | 10,276  |   
|Variance Percent                  |  |                              | 182    | %            |  |          | 305   | %         |  |          | (581   | )% |  |   | 168    | % |  |   | (65     | )%
|Performance Ratios                |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|Q2 03                             |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|ROE                               |  |                              | 163    | %            |  |          | 7     | %         |  |          |       |    |  |   | 66     | % |  |   | 4       | % 
|ROA                               |  |                              | 9.42   | %            |  |          | 0.72  | %         |  |          |       |    |  |   | 5.06   | % |  |   | 0.27    | % 
|NIM                               |  |                              | 4.17   | %            |  |          | 2.89  | %         |  |          |       |    |  |   | 4.45   | % |  |   | 1.67    | % 
|Efficiency ratio                  |  |                              | 43     | %            |  |          | 24    | %         |  |          |       |    |  |   | 50     | % |  |   | 50      | % 
|Capital adjusted efficiency ratio |  |                              | 9      | %            |  |          | 72    | %         |  |          |       |    |  |   | 22     | % |  |   | 227     | % 
|Average FTE                       |  |                              | 622    |              |  |          | 11    |           |  |          | 219    |    |  |   | 852    |   |  |   | 430     |   
|Q1 03                             |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|ROE                               |  |                              | 128    | %            |  |          | 7     | %         |  |          |       |    |  |   | 54     | % |  |   | 8       | % 
|ROA                               |  |                              | 8.09   | %            |  |          | 0.74  | %         |  |          |       |    |  |   | 4.38   | % |  |   | 0.53    | % 
|NIM                               |  |                              | 4.14   | %            |  |          | 2.98  | %         |  |          |       |    |  |   | 4.90   | % |  |   | 1.77    | % 
|Efficiency ratio                  |  |                              | 46     | %            |  |          | 47    | %         |  |          |       |    |  |   | 56     | % |  |   | 44      | % 
|Capital adjusted efficiency ratio |  |                              | 12     | %            |  |          | 146   | %         |  |          |       |    |  |   | 27     | % |  |   | 176     | % 
|Average FTE                       |  |                              | 553    |              |  |          | 9     |           |  |          | 203    |    |  |   | 765    |   |  |   | 450     |   
|Q2 02                             |  |                              |        |              |  |          |       |           |  |          |        |    |  |   |        |   |  |   |         |   
|ROE                               |  |                              | 127    | %            |  |          | 5     | %         |  |          |       |    |  |   | 55     | % |  |   | 19      | % 
|ROA                               |  |                              | 7.29   | %            |  |          | 0.51  | %         |  |          |       |    |  |   | 4.54   | % |  |   | 1.18    | % 
|NIM                               |  |                              | 4.03   | %            |  |          | 2.23  | %         |  |          |       |    |  |   | 7.24   | % |  |   | 2.34    | % 
|Efficiency ratio                  |  |                              | 58     | %            |  |          | 35    | %         |  |          |       |    |  |   | 65     | % |  |   | 32      | % 
|Capital adjusted efficiency ratio |  |                              | 12     | %            |  |          | 147   | %         |  |          |       |    |  |   | 24     | % |  |   | 62      | % 
|Average FTE                       |  |                              | 375    |              |  |          | 6     |           |  |          | 184    |    |  |   | 565    |   |  |   | 415     |   



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Consumer Bank segments net income was
    up $4.1 million compared with the first quarter of 2003 and
    was up $8.7 million versus last years second quarter.
    These increases were largely due to the higher levels of
    mortgages produced and sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | The Investment Portfolio Group segments net
    income in the second quarter of 2003 declined $2.9 million
    in comparison to the first quarter of 2003 and declined
    $6.7 million in comparison to the second quarter of 2002.
    These decreases are primarily the result of the significant
    reduction in earnings related to the segments investment
    in mortgage servicing and servicing-related assets. Interest
    rates at 45-year lows have created an environment of significant
    mortgage refinancing causing the underlying mortgages to prepay
    very quickly which required accelerated amortization of the
    servicing-related assets. Offsetting the decline in servicing
    fee income were gains on the sale of mortgage loans obtained
    through the exercise of the Companys right as the master
    servicer on several pools of mortgage-backed securities to call
    loans at par when the balance of the pool of loans sold falls
    below 10% of the original pool balance and other loan sale
    activities. These called loans have higher coupons than
    prevailing market rates and the Company is then able to resell
    these loans at gains. This right to call the loans serves as a
    partial hedge on the servicing investments in this period of
    intense prepayment activity.

9



---



##### Table of Contents



The following table details the segment financial
highlights for the three months ended June 30, 2003,
continued:

|                                  |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|--------------------------------- |  | ---------------------- | ------- | -------- |  | --------- | ------- | ------------ |  | ----- | ------- | -- |  | - | ------ | - |  | - | ------- | --
|                                  |  | Treasury               |         |          |  | Corporate |         |              |  |      
|                                  |  | Group                  |         | Subtotal |  | Overhead  |         | Eliminations |  | Total
|                                  |  |                        |         |          |  |           |         |              |  |      
|                                  |  |                        |         |         
|                                  |  | (Dollars in thousands) |         |         
|Mortgage Banking Activities       |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|Q2 03  Pretax income             |  | $                      |        |          |  | $         | 113,478 |              |  | $     |        |    |  | $ | (9,796 | ) |  | $ | 103,682 |   
|Q1 03  Pretax income             |  |                        |        |          |  |           | 91,064  |              |  |       |        |    |  |   | (8,271 | ) |  |   | 82,793  |   
|Annualized Variance Percent       |  |                        | NM      |          |  |           | 98      | %            |  |       | NM      |    |  |   | 74     | % |  |   | 101     | % 
|Q2 02  Pretax income             |  |                        |        |          |  |           | 61,547  |              |  |       |        |    |  |   | (1,933 | ) |  |   | 59,614  |   
|Variance Percent                  |  |                        | NM      |          |  |           | 84      | %            |  |       | NM      |    |  |   | 407    | % |  |   | 74      | % 
|Investing Activities              |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|Q2 03  Pretax income             |  |                        |        |          |  |           | (1,218  | )            |  |       | 105     |    |  |   | 2,696  |   |  |   | 1,583   |   
|Q1 03  Pretax income             |  |                        |        |          |  |           | 13,254  |              |  |       |        |    |  |   | 1,581  |   |  |   | 14,835  |   
|Annualized Variance Percent       |  |                        | NM      |          |  |           | (437    | )%           |  |       | NM      |    |  |   | 282    | % |  |   | (357    | )%
|Q2 02  Pretax income             |  |                        |        |          |  |           | 30,358  |              |  |       | (77     | )  |  |   | 383    |   |  |   | 30,664  |   
|Variance Percent                  |  |                        | NM      |          |  |           | (104    | )%           |  |       | (236    | )% |  |   | 604    | % |  |   | (95     | )%
|Financing and Other Activities    |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|Q2 03  Pretax income             |  |                        | (10,474 | )        |  |           | (12,878 | )            |  |       | (24,017 | )  |  |   | 8      |   |  |   | (36,887 | ) 
|Q1 03  Pretax income             |  |                        | (11,447 | )        |  |           | (13,492 | )            |  |       | (23,116 | )  |  |   |       |   |  |   | (36,608 | ) 
|Q2 02  Pretax income             |  |                        | (15,885 | )        |  |           | (15,913 | )            |  |       | (16,646 | )  |  |   |       |   |  |   | (32,559 | ) 
|Net Income                        |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|Q2 03  Net Income                |  |                        | (6,337  | )        |  |           | 60,126  |              |  |       | (14,467 | )  |  |   | (4,290 | ) |  |   | 41,369  |   
|Q1 03  Net Income                |  |                        | (6,925  | )        |  |           | 54,948  |              |  |       | (13,985 | )  |  |   | (4,046 | ) |  |   | 36,917  |   
|Annualized Variance Percent       |  |                        | (34     | )%       |  |           | 38      | %            |  |       | 14      | %  |  |   | 24     | % |  |   | 48      | % 
|Q2 02  Net Income                |  |                        | (9,515  | )        |  |           | 45,519  |              |  |       | (10,017 | )  |  |   | (928   | ) |  |   | 34,574  |   
|Variance Percent                  |  |                        | (33     | )%       |  |           | 32      | %            |  |       | 44      | %  |  |   | 362    | % |  |   | 20      | % 
|Performance Ratios                |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|Q2 03                             |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|ROE                               |  |                        |        |          |  |           | 31      | %            |  |       |        |    |  |   |       |   |  |   | 18      | % 
|ROA                               |  |                        |        |          |  |           | 2.24    | %            |  |       |        |    |  |   |       |   |  |   | 1.52    | % 
|NIM                               |  |                        |        |          |  |           | 2.67    | %            |  |       |        |    |  |   |       |   |  |   | 2.73    | % 
|Efficiency ratio                  |  |                        |        |          |  |           | 43      | %            |  |       |        |    |  |   |       |   |  |   | 58      | % 
|Capital adjusted efficiency ratio |  |                        |        |          |  |           | 44      | %            |  |       |        |    |  |   |       |   |  |   | 73      | % 
|Average FTE                       |  |                        | 23      |          |  |           | 2,999   |              |  |       | 506     |    |  |   |       |   |  |   | 3,505   |   
|Q1 03                             |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|ROE                               |  |                        |        |          |  |           | 32      | %            |  |       |        |    |  |   |       |   |  |   | 17      | % 
|ROA                               |  |                        |        |          |  |           | 2.25    | %            |  |       |        |    |  |   |       |   |  |   | 1.49    | % 
|NIM                               |  |                        |        |          |  |           | 2.77    | %            |  |       |        |    |  |   |       |   |  |   | 2.80    | % 
|Efficiency ratio                  |  |                        |        |          |  |           | 44      | %            |  |       |        |    |  |   |       |   |  |   | 60      | % 
|Capital adjusted efficiency ratio |  |                        |        |          |  |           | 45      | %            |  |       |        |    |  |   |       |   |  |   | 81      | % 
|Average FTE                       |  |                        | 22      |          |  |           | 2,756   |              |  |       | 529     |    |  |   |       |   |  |   | 3,285   |   
|Q2 02                             |  |                        |         |          |  |           |         |              |  |       |         |    |  |   |        |   |  |   |         |   
|ROE                               |  |                        |        |          |  |           | 38      | %            |  |       |        |    |  |   |       |   |  |   | 16      | % 
|ROA                               |  |                        |        |          |  |           | 2.57    | %            |  |       |        |    |  |   |       |   |  |   | 1.93    | % 
|NIM                               |  |                        |        |          |  |           | 2.88    | %            |  |       |        |    |  |   |       |   |  |   | 3.04    | % 
|Efficiency ratio                  |  |                        |        |          |  |           | 44      | %            |  |       |        |    |  |   |       |   |  |   | 57      | % 
|Capital adjusted efficiency ratio |  |                        |        |          |  |           | 37      | %            |  |       |        |    |  |   |       |   |  |   | 88      | % 
|Average FTE                       |  |                        | 27      |          |  |           | 2,376   |              |  |       | 454     |    |  |   |       |   |  |   | 2,830   |   

10



---



##### Table of Contents






MORTGAGE BANKING ACTIVITIES




Loan Production

During the three months ended June 30, 2003,
the Company produced $8.2 billion of loans, which was a 71%
increase over the $4.8 billion of loans produced during the
three months ended June 30, 2002, and a 24% increase over
the $6.6 billion of loans produced during the first quarter
of 2003. Total production by loan type was as follows:

|                                     |                      |                              |       |          |       |          |       |           |       |          |     |     |    |   |       |       |       |  |    |     |    |  
|------------------------------------ | -------------------- | ---------------------------- | ----- | -------- | ----- | -------- | ----- | --------- | ----- | -------- | --- | --- | -- | - | ----- | ----- | ----- |  | -- | --- | -- | -
|                                     |                      |                             
|                                     |                      | Three Months Ended          
|                                     |                      |                             
|                                     |                      | June 30,                     |       | June 30, |       | Variance |       | March 31, |       | Variance
|                                     |                      | 2003                         |       | 2002     |       | Percent  |       | 2003      |       | Percent 
|                                     |                      |                              |       |          |       |          |       |           |       |         
|                                     |                      |                             
|                                     |                      | (Dollars in millions)       
|Volume by product                    |                      |                              |       |          |       |          |       |           |       |          |     |     |    |   |       |       |       |  |    |    
|Prime(1)                             |                      |                              |       |          |       |          |       |           |       |          |     |     |    |   |       |       |       |  |    |    
|                                     | Agency conforming    |                              | $     | 1,469    |       |          | $     | 738       |       |          |     | 99  | %  |   | $     | 1,418 |       |  |    | 4   | % 
|                                     | Alt-A                |                              |       | 4,081    |       |          |       | 1,956     |       |          |     | 109 | %  |   |       | 3,017 |       |  |    | 35  | % 
|                                     | Jumbo                |                              |       | 1,192    |       |          |       | 968       |       |          |     | 23  | %  |   |       | 1,013 |       |  |    | 18  | % 
|                                     | Government  FHA/ VA |                              |       | 2        |       |          |       | 48        |       |          |     | (96 | )% |   |       | 3     |       |  |    | (33 | )%
|Subprime(1)                          |                      |                              | 465   |          |       |          | 392   |           |       |          | 19  | %   |    |   | 384   |       |       |  | 21 | %  
|Home equity line of credit(2)        |                      |                              | 229   |          |       |          | 82    |           |       |          | 179 | %   |    |   | 180   |       |       |  | 27 | %  
|Consumer construction(2)             |                      |                              | 518   |          |       |          | 416   |           |       |          | 25  | %   |    |   | 440   |       |       |  | 18 | %  
|                                     |                      |                              |       |          |       |          |       |           |       |          |     |     |    |   |       |       |       |  |    |    
|                                     |                      | Subtotal mortgage production |       |          | 7,956 |          |       |           | 4,600 |          |     |     | 73 | % |       |       | 6,455 |  |    |     | 23 | %
|Subdivision construction commitments |                      |                              | 237   |          |       |          | 190   |           |       |          | 25  | %   |    |   | 130   |       |       |  | 82 | %  
|                                     |                      |                              |       |          |       |          |       |           |       |          |     |     |    |   |       |       |       |  |    |    
|                                     |                      | Total production volume      |       | $        | 8,193 |          |       | $         | 4,790 |          |     |     | 71 | % |       | $     | 6,585 |  |    |     | 24 | %
|                                     |                      |                              |       |          |       |          |       |           |       |          |     |     |    |   |       |       |       |  |    |    
|Mortgage  Web-based
    production  |                      | $                            | 5,994 |          |       | $        | 3,141 |           |       |          | 91  | %   |    | $ | 4,920 |       |       |  | 22 | %  
|Mortgage pipeline at period end(3)   |                      | $                            | 6,929 |          |       | $        | 3,722 |           |       |          | 86  | %   |    | $ | 6,044 |       |       |  | 15 | %  



---



|    |                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|(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.

11



---



##### Table of Contents



During the six months ended June 30, 2003,
the Company produced $14.8 billion of loans, which was a 64%
increase over the $9.0 billion of loans produced during the
six months ended June 30, 2002. Total production by loan
type was as follows:

|                                     |                      |                              |        |          |        |          |       |       |       |  |     |     |    |  
|------------------------------------ | -------------------- | ---------------------------- | ------ | -------- | ------ | -------- | ----- | ----- | ----- |  | --- | --- | -- | -
|                                     |                      |                             
|                                     |                      | Six Months Ended            
|                                     |                      |                             
|                                     |                      | June 30,                     |        | June 30, |        | Variance
|                                     |                      | 2003                         |        | 2002     |        | Percent 
|                                     |                      |                              |        |          |        |         
|                                     |                      |                             
|                                     |                      | (Dollars in millions)       
|Volume by product                    |                      |                              |        |          |        |          |       |       |       |  |     |    
|Prime(1)                             |                      |                              |        |          |        |          |       |       |       |  |     |    
|                                     | Agency conforming    |                              | $      | 2,887    |        |          | $     | 1,708 |       |  |     | 69  | % 
|                                     | Alt-A                |                              |        | 7,098    |        |          |       | 3,180 |       |  |     | 123 | % 
|                                     | Jumbo                |                              |        | 2,205    |        |          |       | 2,032 |       |  |     | 9   | % 
|                                     | Government  FHA/ VA |                              |        | 5        |        |          |       | 108   |       |  |     | (95 | )%
|Subprime(1)                          |                      |                              | 849    |          |        |          | 726   |       |       |  | 17  | %  
|Home equity line of credit(2)        |                      |                              | 409    |          |        |          | 139   |       |       |  | 194 | %  
|Consumer construction(2)             |                      |                              | 958    |          |        |          | 766   |       |       |  | 25  | %  
|                                     |                      |                              |        |          |        |          |       |       |       |  |     |    
|                                     |                      | Subtotal mortgage production |        |          | 14,411 |          |       |       | 8,659 |  |     |     | 66 | %
|Subdivision construction commitments |                      |                              | 367    |          |        |          | 333   |       |       |  | 10  | %  
|                                     |                      |                              |        |          |        |          |       |       |       |  |     |    
|                                     |                      | Total production volume      |        | $        | 14,778 |          |       | $     | 8,992 |  |     |     | 64 | %
|                                     |                      |                              |        |          |        |          |       |       |       |  |     |    
|Mortgage  Web-based
    production  |                      | $                            | 10,914 |          |        | $        | 6,383 |       |       |  | 71  | %  
|Mortgage pipeline at period end(3)   |                      | $                            | 6,929  |          |        | $        | 3,722 |       |       |  | 86  | %  



---



|    |                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|(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.




Mortgage Production by Division and
Channel

IndyMac generates its mortgage production through
multiple channels on a nationwide basis with a concentration in
those regions of the country in which we have regional offices
or in which there are higher home prices, including California,
Florida, New Jersey and New York. Our highest concentration of
mortgage loans relates to properties in California. Mortgages
secured by California properties accounted for 52% of the
mortgage loans produced in the three months ended June 30,
2003 based on dollar value, and 43% based on number of loans.

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),
HELOC and Retail Bank divisions.

12



---



##### Table of Contents



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, 2003.

|                                                                                 |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |       |       |  
|-------------------------------------------------------------------------------- | ------------------------------------------------ | ----------------------------------------------- | --- | ----- | ----- | --- | --- | --- | --- | ----- | -- | --- | --- | - | --- | --- | --- | - | --- | ----- | ----- | -
|                                                                                 |                                                  |                                                
|                                                                                 |                                                  | Relationship Businesses                       
|                                                                                 |                                                  | IndyMac Mortgage Bank                          
|                                                                                 |                                                  |                                                
|Three Months Ended June 30, 2003                                                 |                                                  | B2B                                             |     | B2R   |       | HCL |     | HBD |     | Total
|                                                                                 |                                                  |                                                 |     |       |       |     |     |     |     |      
|                                                                                 |                                                  |                                                
|                                                                                 |                                                  | (Dollars in millions)                          
|Volume by Channel and Customer
    Source                                        |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|                                                                                 | Mortgage brokers                                 |                                                 | $   | 3,109 |       |     | $   |    |     |       | $  | 380 |     |   | $   |    |     |   | $   | 3,489 |      
|                                                                                 | Mortgage bankers                                 |                                                 |     | 1,341 |       |     |     |    |     |       |    | 223 |     |   |     |    |     |   |     | 1,564 |      
|                                                                                 | Conduit                                          |                                                 |     | 497   |       |     |     |    |     |       |    |    |     |   |     |    |     |   |     | 497   |      
|                                                                                 | Realtors                                         |                                                 |     |      |       |     |     | 279 |     |       |    |    |     |   |     |    |     |   |     | 279   |      
|                                                                                 | Builder/ Builder affiliates                      |                                                 |     |      |       |     |     |    |     |       |    | 17  |     |   |     | 121 |     |   |     | 138   |      
|                                                                                 | Financial institutions                           |                                                 |     | 125   |       |     |     |    |     |       |    |    |     |   |     |    |     |   |     | 125   |      
|                                                                                 | Consumer direct marketing by HCL                 |                                                 |     |      |       |     |     |    |     |       |    | 128 |     |   |     |    |     |   |     | 128   |      
|                                                                                 |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|                                                                                 |                                                  | Subtotal mortgage production                    |     |       | 5,072 |     |     | $   | 279 |       |    |     | 748 |   |     |     | 121 |   |     |       | 6,220 |  
|                                                                                 | Builder and subdivision construction commitments |                                                 |     |      |       |     |     |    |     |       |    |    |     |   |     | 237 |     |   |     | 237   |      
|                                                                                 |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|                                                                                 |                                                  | Total relationship businesses production volume |     | $     | 5,072 |     |     | $   | 279 |       |    | $   | 748 |   |     | $   | 358 |   |     | $     | 6,457 |  
|                                                                                 |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|Percentage of total production                                                   |                                                  |                                                 | 63  | %     |       |     | 3   | %   |     |       | 9  | %   |     |   | 4   | %   |     |   | 79  | %    
|Percentage change relative to:                                                   |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|                                                                                 |                                                  | 2nd quarter 2002                                |     |       | 56    | %   |     |     | 205 | %     |    |     | 16  | % |     |     | 74  | % |     |       | 54    | %
|                                                                                 |                                                  | 1st quarter 2003                                |     |       | 27    | %   |     |     | 13  | %     |    |     | 10  | % |     |     | 61  | % |     |       | 25    | %
|Composition of mortgage production                                               |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|                                                                                 |                                                  | Purchase transactions                           |     |       | 28    | %   |     |     | 31  | %     |    |     | 99  | % |     |     | 70  | % |     |       | 35    | %
|                                                                                 |                                                  | Cash-out refinance transactions                 |     |       | 46    | %   |     |     | 34  | %     |    |     | 0   | % |     |     | 16  | % |     |       | 39    | %
|                                                                                 |                                                  | Rate/term refinance transactions                |     |       | 26    | %   |     |     | 35  | %     |    |     | 1   | % |     |     | 14  | % |     |       | 26    | %
|Key Performance Indicators for the Three
    Months Ended June 30, 2003          |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|Active Customers(1)                                                              |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|                                                                                 | Average monthly active customers                 |                                                 |     | 2,211 |       |     |     | 249 |     |       |    | 252 |     |   |     | 30  |     |   |     | 2,742 |      
|                                                                                 | Active customers during the quarter              |                                                 |     | 3,416 |       |     |     | 504 |     |       |    | 609 |     |   |     | 49  |     |   |     | 4,578 |      
|                                                                                 | Net new customers during the quarter(2)          |                                                 |     | 522   |       |     |     | 173 |     |       |    | N/A |     |   |     | 10  |     |   |     | 705   |      
|Sales and marketing personnel                                                    |                                                  |                                                 | 400 |       |       |     | 72  |     |     |       | 72 |     |     |   | 27  |     |     |   | 571 |      
|Cost per funded mortgage loan (bps)                                              |                                                  |                                                 | 73  |       |       |     | 189 |     |     |       | 80 |     |     |   | 103 |     |     |   | N/A |      
|Percentage Change for the Three Months Ended
    June 30, 2003 vs. June 30, 2002 |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|Active Customers(1)                                                              |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |     |   |     |     |     |   |     |      
|                                                                                 | Average monthly active customers                 |                                                 |     | 28    | %     |     |     | 147 | %   |       |    | 16  | %   |   |     | 233 | %   |   |     | 33    | %    
|                                                                                 | Active customers during the quarter              |                                                 |     | 12    | %     |     |     | 108 | %   |       |    | 18  | %   |   |     | 113 | %   |   |     | 20    | %    
|Sales and marketing personnel                                                    |                                                  |                                                 | 33  | %     |       |     | 118 | %   |     |       | 44 | %   |     |   | 69  | %   |     |   | 43  | %    
|Cost per funded mortgage loan (bps)                                              |                                                  |                                                 | (26 | )%    |       |     | (31 | )%  |     |       | (7 | )%  |     |   | N/A |     |     |   | N/A |      

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|                                                                               |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |       |        |  
|------------------------------------------------------------------------------ | ------------------------------------------------ | ----------------------------------------------- | --- | ----- | ----- | --- | --- | --- | --- | ----- | -- | --- | ----- | - | --- | --- | --- | - | --- | ----- | ------ | -
|                                                                               |                                                  |                                                
|                                                                               |                                                  | Relationship Businesses                       
|                                                                               |                                                  | IndyMac Mortgage Bank                          
|                                                                               |                                                  |                                                
|Six Months Ended June 30, 2003                                                 |                                                  | B2B                                             |     | B2R   |       | HCL |     | HBD |     | Total
|                                                                               |                                                  |                                                 |     |       |       |     |     |     |     |      
|                                                                               |                                                  |                                                
|                                                                               |                                                  | (Dollars in millions)                          
|Volume by Channel and Customer
    Source                                      |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|                                                                               | Mortgage brokers                                 |                                                 | $   | 5,550 |       |     | $   |    |     |       | $  | 695 |       |   | $   |    |     |   | $   | 6,245 |       
|                                                                               | Mortgage bankers                                 |                                                 |     | 2,461 |       |     |     |    |     |       |    | 461 |       |   |     |    |     |   |     | 2,922 |       
|                                                                               | Conduit                                          |                                                 |     | 836   |       |     |     |    |     |       |    |    |       |   |     |    |     |   |     | 836   |       
|                                                                               | Realtors                                         |                                                 |     |      |       |     |     | 526 |     |       |    |    |       |   |     |    |     |   |     | 526   |       
|                                                                               | Builder/ Builder affiliates                      |                                                 |     |      |       |     |     |    |     |       |    | 33  |       |   |     | 213 |     |   |     | 246   |       
|                                                                               | Financial institutions                           |                                                 |     | 228   |       |     |     |    |     |       |    |    |       |   |     |    |     |   |     | 228   |       
|                                                                               | Consumer direct marketing by HCL                 |                                                 |     |      |       |     |     |    |     |       |    | 239 |       |   |     |    |     |   |     | 239   |       
|                                                                               |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|                                                                               |                                                  | Subtotal mortgage production                    |     |       | 9,075 |     |     | $   | 526 |       |    |     | 1,428 |   |     |     | 213 |   |     |       | 11,242 |  
|                                                                               | Builder and subdivision construction commitments |                                                 |     |      |       |     |     |    |     |       |    |    |       |   |     | 367 |     |   |     | 367   |       
|                                                                               |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|                                                                               |                                                  | Total relationship businesses production volume |     | $     | 9,075 |     |     | $   | 526 |       |    | $   | 1,428 |   |     | $   | 580 |   |     | $     | 11,609 |  
|                                                                               |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|Percentage of total production                                                 |                                                  |                                                 | 61  | %     |       |     | 4   | %   |     |       | 10 | %   |       |   | 4   | %   |     |   | 79  | %    
|Percentage change relative to:                                                 |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|                                                                               |                                                  | 2nd quarter 2002                                |     |       | 49    | %   |     |     | 184 | %     |    |     | 22    | % |     |     | 65  | % |     |       | 49     | %
|Composition of mortgage production                                             |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|                                                                               |                                                  | Purchase transactions                           |     |       | 26    | %   |     |     | 30  | %     |    |     | 99    | % |     |     | 72  | % |     |       | 34     | %
|                                                                               |                                                  | Cash-out refinance transactions                 |     |       | 47    | %   |     |     | 35  | %     |    |     | 0     | % |     |     | 15  | % |     |       | 40     | %
|                                                                               |                                                  | Rate/term refinance transactions                |     |       | 27    | %   |     |     | 35  | %     |    |     | 1     | % |     |     | 13  | % |     |       | 26     | %
|Key Performance Indicators for the Six Months
    Ended June 30, 2003          |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|Active Customers(1)                                                            |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|                                                                               | Average monthly active customers                 |                                                 |     | 2,101 |       |     |     | 237 |     |       |    | 226 |       |   |     | 29  |     |   |     | 2,593 |       
|                                                                               | Active customers during the six months           |                                                 |     | 4,145 |       |     |     | 715 |     |       |    | 903 |       |   |     | 66  |     |   |     | 5,829 |       
|                                                                               | Net new customers during the six months(2)       |                                                 |     | 965   |       |     |     | 237 |     |       |    | N/A |       |   |     | 15  |     |   |     | 1,217 |       
|Cost per funded mortgage loan (bps)                                            |                                                  |                                                 | 75  |       |       |     | 198 |     |     |       | 79 |     |       |   | 106 |     |     |   | N/A |      
|Percentage Change for the Six Months Ended
    June 30, 2003 vs. June 30, 2002 |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|Active Customers(1)                                                            |                                                  |                                                 |     |       |       |     |     |     |     |       |    |     |       |   |     |     |     |   |     |      
|                                                                               | Average monthly active customers                 |                                                 |     | 20    | %     |     |     | 137 | %   |       |    | 19  | %     |   |     | 222 | %   |   |     | 26    | %     
|                                                                               | Active customers during the six months           |                                                 |     | 7     | %     |     |     | 95  | %   |       |    | 21  | %     |   |     | 61  | %   |   |     | 16    | %     
|Cost per funded mortgage loan (bps)                                            |                                                  |                                                 | (23 | )%    |       |     | (27 | )%  |     |       | 3  | %   |       |   | N/A |     |     |   | 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. The sales and marketing personnel
    under the HCL division are primarily focused on marketing the
    consumer construction product directly to consumers.
|   
|(2) | Net new customers are the number of new customers
    signed up during the period less those terminated.                                                                                                                                                                                                                                                                                                                                                                                                           

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IndyMac Mortgage Banks production increase
of 54% from the three months ended June 30, 2002 to the
three months ended June 30, 2003 was driven by 56% growth
in the core B2B channel and bolstered by even faster growth in
our newer channels including B2R and HBD partially offset by the
slower growth in HCL. The mix of business was driven heavily
towards refinance activity, reflecting the overall refinance
environment. In addition, we continue to focus on activating new
customers and made progress in all channels. At the same time,
we have been more disciplined in adding new customers that
possess a profile that is more likely to remain active over the
long term. Our active customer base has increased by 12% from
the second quarter of 2002. Consistent with our focus on new
customers, we are expanding our sales staff in all channels,
focusing on under-penetrated markets consistent with our overall
strategy to expand the geographic distribution of our operating
centers. During the second quarter 2003, we opened our Texas
Regional Operations Center and plan to open two Regional
Operations Centers in the second half of 2003. With respect to
costs, while we continue to implement permanent process
improvements in our mortgage operations, the bulk of
improvements in costs in basis points are attributable to
greater scale due to increased volume and higher average
balances obtainable in a refinance environment.

The following table shows production and other
key performance indicators of the various consumer direct
businesses of IndyMac Consumer Bank during the three months
ended June 30, 2003.

|                                                                                     |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |       |     |  
|------------------------------------------------------------------------------------ | --------------------------------------- | ---------------------------- | ----- | ----- | --- | ----------- | --- | ----- | --- | - | --- | --- | --- | - | ----- | ----- | --- | -
|                                                                                     |                                         |                             
|                                                                                     |                                         | Consumer Direct Businesses 
|                                                                                     |                                         | IndyMac Consumer Bank       
|                                                                                     |                                         |                             
|Three Months Ended June 30, 2003                                                     |                                         | B2C                          |       | HELOC |     | Retail Bank |     | Total
|                                                                                     |                                         |                              |       |       |     |             |     |      
|                                                                                     |                                         |                             
|                                                                                     |                                         | (Dollars in millions)       
|Volume by Channel and Source(1)                                                      |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|Web-based Production                                                                 |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                     | Direct at www.indymacmortgage.com       |                              | $     | 331   |     |             | $   |      |     |   | $   |    |     |   | $     | 331   |    
|                                                                                     | Indirect Web-based leads                |                              |       | 150   |     |             |     |      |     |   |     |    |     |   |       | 150   |    
|Cross-marketing and portfolio refinancing                                            |                                         |                              | 882   |       |     |             |    |       |     |   | 59  |     |     |   | 941   |      
|Direct telemarketing and affinity relationships                                      |                                         |                              | 208   |       |     |             | 46  |       |     |   |    |     |     |   | 254   |      
|Retail banking branches                                                              |                                         |                              |      |       |     |             |    |       |     |   | 60  |     |     |   | 60    |      
|                                                                                     |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                     | Total consumer direct production volume |                              | $     | 1,571 |     |             | $   | 46    |     |   | $   | 119 |     |   | $     | 1,736 |    
|                                                                                     |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|Percentage of total production                                                       |                                         |                              | 19    | %     |     |             | 1   | %     |     |   | 1   | %   |     |   | 21    | %    
|Percentage change relative to:                                                       |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                     |                                         | 2nd quarter 2002             |       |       | 175 | %           |     |       | N/A |   |     |     | 325 | % |       |       | 189 | %
|                                                                                     |                                         | 1st quarter 2003             |       |       | 20  | %           |     |       | 12  | % |     |     | 52  | % |       |       | 21  | %
|Composition of mortgage production                                                   |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                     | Purchase transactions                   |                              |       | 4     | %   |             |     | N/A   |     |   |     | 18  | %   |   |       | 5     | %  
|                                                                                     | Cash-out refinance transactions         |                              |       | 43    | %   |             |     | N/A   |     |   |     | 32  | %   |   |       | 42    | %  
|                                                                                     | Rate/term refinance transactions        |                              |       | 53    | %   |             |     | N/A   |     |   |     | 50  | %   |   |       | 53    | %  
|Key Drivers of Growth and Profitability for
    the Three Months Ended June 30, 2003 |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|Marketing costs (in thousands)                                                       |                                         | $                            | 3,408 |       |     |             | N/A |       |     | $ | 32  |     |     | $ | 3,440 |      
|Marketing cost per funded loan (dollars)                                             |                                         | $                            | 404   |       |     |             | N/A |       |     | $ | 52  |     |     | $ | 456   |      
|Cost per funded mortgage loan (bps)                                                  |                                         |                              | 157   |       |     |             | N/A |       |     |   | 112 |     |     |   | N/A   |      

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|                                                                                   |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |       |     |  
|---------------------------------------------------------------------------------- | --------------------------------------- | ---------------------------- | ----- | ----- | --- | ----------- | --- | ----- | --- | - | --- | --- | --- | - | ----- | ----- | --- | -
|                                                                                   |                                         |                             
|                                                                                   |                                         | Consumer Direct Businesses 
|                                                                                   |                                         | IndyMac Consumer Bank       
|                                                                                   |                                         |                             
|Six Months Ended June 30, 2003                                                     |                                         | B2C                          |       | HELOC |     | Retail Bank |     | Total
|                                                                                   |                                         |                              |       |       |     |             |     |      
|                                                                                   |                                         |                             
|                                                                                   |                                         | (Dollars in millions)       
|Volume by Channel and Source(1)                                                    |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|Web-based Production                                                               |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                   | Direct at www.indymacmortgage.com       |                              | $     | 659   |     |             | $   |      |     |   | $   |    |     |   | $     | 659   |    
|                                                                                   | Indirect Web-based leads                |                              |       | 249   |     |             |     |      |     |   |     |    |     |   |       | 249   |    
|Cross-marketing and portfolio refinancing                                          |                                         |                              | 1,557 |       |     |             |    |       |     |   | 73  |     |     |   | 1,630 |      
|Direct telemarketing and affinity relationships                                    |                                         |                              | 420   |       |     |             | 87  |       |     |   |    |     |     |   | 507   |      
|Retail banking branches                                                            |                                         |                              | N/A   |       |     |             |    |       |     |   | 124 |     |     |   | 124   |      
|                                                                                   |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                   | Total consumer direct production volume |                              | $     | 2,885 |     |             | $   | 87    |     |   | $   | 197 |     |   | $     | 3,169 |    
|                                                                                   |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|Percentage of total production                                                     |                                         |                              | 19    | %     |     |             | 1   | %     |     |   | 1   | %   |     |   | 21    | %    
|Percentage change relative to:                                                     |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                   |                                         | 2nd quarter 2002             |       |       | 153 | %           |     |       | N/A |   |     |     | 286 | % |       |       | 166 | %
|Composition of mortgage production                                                 |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|                                                                                   | Purchase transactions                   |                              |       | 4     | %   |             |     | N/A   |     |   |     | 17  | %   |   |       | 5     | %  
|                                                                                   | Cash-out refinance transactions         |                              |       | 42    | %   |             |     | N/A   |     |   |     | 34  | %   |   |       | 41    | %  
|                                                                                   | Rate/term refinance transactions        |                              |       | 54    | %   |             |     | N/A   |     |   |     | 49  | %   |   |       | 54    | %  
|Key Drivers of Growth and Profitability for
    the Six Months Ended June 30, 2003 |                                         |                              |       |       |     |             |     |       |     |   |     |     |     |   |       |      
|Marketing costs (in thousands)                                                     |                                         | $                            | 6,271 |       |     |             | N/A |       |     | $ | 64  |     |     | $ | 6,335 |      
|Marketing cost per funded loan (dollars)                                           |                                         | $                            | 411   |       |     |             | N/A |       |     | $ | 63  |     |     | $ | 474   |      
|Cost per funded mortgage loan (bps)                                                |                                         |                              | 155   |       |     |             | N/A |       |     |   | 123 |     |     |   | N/A   |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | HELOC amounts represent the loans produced only
    by the HELOC division. HELOC loans produced by other business
    divisions totaled $185 million and $324 million during
    the three and six months ended June 30, 2003, respectively.
    HELOC loans produced by business divisions other than the HELOC
    division are included in the production volume of the respective
    originating business division.

B2Cs production volume grew 175% for the
three months ended June 30, 2003 compared to the three
months ended June 30, 2002, resulting in a decrease in cost
per funded loan of 22%. The B2C division is currently our most
established consumer-direct business, generating 91% of the
total consumer-direct business in 2003. This business is
expected to be more cyclical as a result of changes in interest
rates. The HELOC division was established during 2002 to
facilitate targeted marketing of our HELOC product directly to
consumers in addition to the production of HELOCs within our
other production channels. Through a streamlined application
process and competitive pricing, this division provides
homeowners the ability to easily access the excess equity in
their homes for a variety of uses. Currently, we hold the HELOCs
generated by the HELOC division for investment, as these HELOCs
are prime rate based, and have high FICO scores and low combined
loan-to-value ratios. The HELOC product also tends to be
somewhat counter-cyclical to the mortgage industry. As interest
rates rise, consumers who want to access the equity in their
home are more inclined to utilize a HELOC product rather than a
cash-out refinance of their existing low-rate mortgage loan. As
a result, we expect the HELOC divisions production to
increase when the mortgage refinance boom abates.

Loan Sales

The Company sold $6.3 billion and
$3.7 billion of loans during the three months ended
June 30, 2003 and 2002, respectively, and
$11.9 billion and $8.0 billion for the six months then
ended. The Companys gain on sale of loans increased 44% in
the second quarter of 2003 to $102 million, from
$71 million in the second quarter of 2002. The increase in
the gain on sale was a result of the 71% increase in loans sold,
partially offset

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by the decrease of 31 basis points in the profit
margin, net of hedging losses, from 1.92% in the second quarter
of 2002 to 1.61% in the second quarter of 2003. The decrease in
the net margin after hedging is due to a combination of factors
including: (1) a higher concentration of lower margin loans
sold; (2) higher hedging costs due to the volatility of
interest rates; and (3) additions to our repurchase
reserve. These items were partially offset by the sale of
certain higher margin loans that were obtained through the
exercise of IndyMacs call provision as the master servicer
of its loan securitization transactions.


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. In a period of declining
interest rates, hedging has the effect of reducing the gain on
sale of the Companys mortgage loans. In a period of rising
rates, hedging protects the Company from deterioration in the
net margin. The table below illustrates the impact of the
Companys pipeline hedging activities.

|                                  |  |                       |      |          |  |          |      |           |  |          |     |    |  |   |      |   |  |  |    |  
|--------------------------------- |  | --------------------- | ---- | -------- |  | -------- | ---- | --------- |  | -------- | --- | -- |  | - | ---- | - |  |  | -- | -
|                                  |  |                      
|                                  |  | Three Months Ended   
|                                  |  |                      
|                                  |  | June 30,              |      | June 30, |  |          |      | March 31, |  |         
|                                  |  | 2003                  |      | 2002     |  | % Change |      | 2003      |  | % Change
|                                  |  |                       |      |          |  |          |      |           |  |         
|                                  |  |                      
|                                  |  | (Dollars in millions)
|Gross gain on mortgage loan sales |  | $                     | 163  |          |  | $        | 133  |           |  |          | 23  | %  |  | $ | 118  |   |  |  | 38 | %
|Gross margin before hedging       |  |                       | 2.57 | %        |  |          | 3.59 | %         |  |          | (28 | )% |  |   | 2.14 | % |  |  | 20 | %
|Hedging losses                    |  | $                     | (61  | )        |  | $        | (62  | )         |  |          | (2  | )% |  | $ | (34  | ) |  |  | 79 | %
|Net gains on sale                 |  | $                     | 102  |          |  | $        | 71   |           |  |          | 44  | %  |  | $ | 84   |   |  |  | 21 | %
|Net margin after hedging          |  |                       | 1.61 | %        |  |          | 1.92 | %         |  |          | (16 | )% |  |   | 1.52 | % |  |  | 6  | %

|                                  |  |                       |      |          |  |          |      |   |  |  |     |   
|--------------------------------- |  | --------------------- | ---- | -------- |  | -------- | ---- | - |  |  | --- | --
|                                  |  |                      
|                                  |  | Six Months Ended     
|                                  |  |                      
|                                  |  | June 30,              |      | June 30, |  |         
|                                  |  | 2003                  |      | 2002     |  | % Change
|                                  |  |                       |      |          |  |         
|                                  |  |                      
|                                  |  | (Dollars in millions)
|Gross gain on mortgage loan sales |  | $                     | 281  |          |  | $        | 224  |   |  |  | 25  | % 
|Gross margin before hedging       |  |                       | 2.37 | %        |  |          | 2.81 | % |  |  | (16 | )%
|Hedging losses                    |  | $                     | (95  | )        |  | $        | (75  | ) |  |  | 27  | % 
|Net gains on sale                 |  | $                     | 186  |          |  | $        | 149  |   |  |  | 25  | % 
|Net margin after hedging          |  |                       | 1.57 | %        |  |          | 1.87 | % |  |  | (16 | )%

The Company enters into commitments to make loans
whereby the interest rate on the loan is set prior to funding
(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,
they are recorded at fair value. The Company hedges the risk of
changes in fair value of rate lock commitments by selling
forward contracts on securities of Fannie Mae or Freddie Mac.
These forward contracts are also accounted for as derivatives
and recorded at fair value.

In measuring the fair value of rate lock
commitments, the expected profit margin of the loan that would
be realized upon a loan sale is used. This value excludes the
value of the MSRs inherent in the loan except for certain high
quality, liquid, conventional mortgages where whole loan sale
prices including servicing rights are readily available. These
values are calculated using the same methodologies that are used
in our loan sales, adjusted using an anticipated fallout factor
for rate lock commitments that will likely not be funded. This
policy of recognizing the value of the derivative has the effect
of recognizing a portion of the gain from mortgage loans before
the loans are funded. There is a diversity in practice among
participants in the mortgage banking industry, and the
possibility exists that further accounting guidance for
determining the fair value of rate lock commitments could be
developed, which would result in a change in our valuation
policies. It is important to note that the time from rate lock
commitment to loan sale is generally less than 90 days;
therefore, any change to current practice would have only a
short-term impact on revenues and net income. As of
June 30, 2003, the fair value of the rate lock commitments,
net of related hedges, was $36.8 million.

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

17



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components may vary in differing interest rate
environments and sale strategies. The following table depicts
the total revenue margin on mortgage loans sold, which is
calculated by dividing the sum of gain on sale of loans, net
interest income (refer to 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 fee
income by the amount of loans sold:


|                               |  |                        |           |            |  |          |      |            |  |           |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|------------------------------ |  | ---------------------- | --------- | ---------- |  | -------- | ---- | ---------- |  | --------- | --------- | ---------- |  |  | ---- | - |  | - | --------- |  |  |  | ---- | -
|                               |  |                       
|                               |  | Three Months Ended    
|                               |  |                       
|                               |  | June 30,               |           | % of loans |  | June 30, |      | % of loans |  | March 31, |           | % of loans
|                               |  | 2003                   |           | sold       |  | 2002     |      | sold       |  | 2003      |           | sold      
|                               |  |                        |           |            |  |          |      |            |  |           |           |           
|                               |  |                       
|                               |  | (Dollars in thousands)
|Gain on sale of loans          |  | $                      | 102,146   |            |  |          | 1.61 | %          |  | $         | 71,280    |            |  |  | 1.92 | % |  | $ | 83,784    |  |  |  | 1.52 | %
|Net interest income            |  |                        | 39,204    |            |  |          | 0.62 | %          |  |           | 18,990    |            |  |  | 0.51 | % |  |   | 32,007    |  |  |  | 0.58 | %
|Fee income                     |  |                        | 18,011    |            |  |          | 0.29 | %          |  |           | 9,526     |            |  |  | 0.26 | % |  |   | 14,791    |  |  |  | 0.26 | %
|                               |  |                        |           |            |  |          |      |            |  |           |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|Total mortgage banking revenue |  | $                      | 159,361   |            |  |          | 2.52 | %          |  | $         | 99,796    |            |  |  | 2.69 | % |  | $ | 130,582   |  |  |  | 2.36 | %
|                               |  |                        |           |            |  |          |      |            |  |           |           |            |  |  |      |   |  |   |           |  |  |  |      |  
|Loans sold                     |  | $                      | 6,335,907 |            |  |          |      |            |  | $         | 3,707,070 |            |  |  |      |   |  | $ | 5,523,701 |  |  |  |      |  
|                               |  |                        |           |            |  |          |      |            |  |           |           |            |  |  |      |   |  |   |           |  |  |  |      |  

|                               |  |                  |            |                        |  |          |      |            |  |   |           |  |  |  |      |  
|------------------------------ |  | ---------------- | ---------- | ---------------------- |  | -------- | ---- | ---------- |  | - | --------- |  |  |  | ---- | -
|                               |  |                 
|                               |  | Six Months Ended
|                               |  |                 
|                               |  | June 30,         |            | % of loans             |  | June 30, |      | % of loans
|                               |  | 2003             |            | sold                   |  | 2002     |      | sold      
|                               |  |                  |            |                        |  |          |      |           
|                               |  |                  |            |                        |  |         
|                               |  |                  |            | (Dollars in thousands) |  |         
|Gain on sale of loans          |  | $                | 185,929    |                        |  |          | 1.57 | %          |  | $ | 148,746   |  |  |  | 1.87 | %
|Net interest income            |  |                  | 71,211     |                        |  |          | 0.60 | %          |  |   | 44,694    |  |  |  | 0.56 | %
|Fee income                     |  |                  | 32,802     |                        |  |          | 0.27 | %          |  |   | 19,444    |  |  |  | 0.24 | %
|                               |  |                  |            |                        |  |          |      |            |  |   |           |  |  |  |      |  
|Total mortgage banking revenue |  | $                | 289,942    |                        |  |          | 2.44 | %          |  | $ | 212,884   |  |  |  | 2.67 | %
|                               |  |                  |            |                        |  |          |      |            |  |   |           |  |  |  |      |  
|Loans sold                     |  | $                | 11,859,608 |                        |  |          |      |            |  | $ | 7,973,389 |  |  |  |      |  
|                               |  |                  |            |                        |  |          |      |            |  |   |           |  |  |  |      |  

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

|                                         |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |     |  
|---------------------------------------- | ----------------------- | --------------------- | ----- | ------------ |  | -------- | -- | ------------ | - | --------- | ----- | ------------ |  |  | -- | --- | - | - | ----- | ----- |  |  | -- | --- | -
|                                         |                         |                      
|                                         |                         | Three Months Ended   
|                                         |                         |                      
|                                         |                         | June 30,              |       | Distribution |  | June 30, |    | Distribution |   | March 31, |       | Distribution
|                                         |                         | 2003                  |       | Percentages  |  | 2002     |    | Percentages  |   | 2003      |       | Percentages 
|                                         |                         |                       |       |              |  |          |    |              |   |           |       |             
|                                         |                         |                      
|                                         |                         | (Dollars in millions)
|Sales to the GSEs(1)                     |                         | $                     | 3,459 |              |  |          | 48 | %            |   | $         | 2,032 |              |  |  | 53 | %   |   | $ | 3,464 |       |  |  | 58 | %  
|Private-label securitizations            |                         |                       | 1,617 |              |  |          | 23 | %            |   |           | 1,277 |              |  |  | 33 | %   |   |   | 1,471 |       |  |  | 25 | %  
|Whole loan sales                         |                         |                       | 1,260 |              |  |          | 18 | %            |   |           | 398   |              |  |  | 10 | %   |   |   | 589   |       |  |  | 10 | %  
|                                         |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |    
|                                         | Subtotal sales          |                       |       | 6,336        |  |          |    | 89           | % |           |       | 3,707        |  |  |    | 96  | % |   |       | 5,524 |  |  |    | 93  | %
|Investment portfolio
    acquisitions(2) |                         |                       | 798   |              |  |          | 11 | %            |   |           | 143   |              |  |  | 4  | %   |   |   | 403   |       |  |  | 7  | %  
|                                         |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |    
|                                         | Total loan distribution |                       | $     | 7,134        |  |          |    | 100          | % |           | $     | 3,850        |  |  |    | 100 | % |   | $     | 5,927 |  |  |    | 100 | %
|                                         |                         |                       |       |              |  |          |    |              |   |           |       |              |  |  |    |     |   |   |       |       |  |  |    |    

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|                                     |                         |                  |       |                       |  |          |    |              |   |   |       |       |  |  |    |     |  
|------------------------------------ | ----------------------- | ---------------- | ----- | --------------------- |  | -------- | -- | ------------ | - | - | ----- | ----- |  |  | -- | --- | -
|                                     |                         |                 
|                                     |                         | Six Months Ended
|                                     |                         |                 
|                                     |                         | June 30,         |       | Distribution          |  | June 30, |    | Distribution
|                                     |                         | 2003             |       | Percentages           |  | 2002     |    | Percentages 
|                                     |                         |                  |       |                       |  |          |    |             
|                                     |                         |                  |       |                       |  |         
|                                     |                         |                  |       | (Dollars in millions) |  |         
|Sales to the GSEs(1)                 |                         | $                | 6,923 |                       |  |          | 53 | %            |   | $ | 4,650 |       |  |  | 56 | %  
|Private-label securitizations        |                         |                  | 3,088 |                       |  |          | 24 | %            |   |   | 2,819 |       |  |  | 34 | %  
|Whole loan sales                     |                         |                  | 1,849 |                       |  |          | 14 | %            |   |   | 504   |       |  |  | 6  | %  
|                                     |                         |                  |       |                       |  |          |    |              |   |   |       |       |  |  |    |    
|                                     | Subtotal sales          |                  |       | 11,860                |  |          |    | 91           | % |   |       | 7,973 |  |  |    | 96  | %
|Investment portfolio acquisitions(2) |                         |                  | 1,200 |                       |  |          | 9  | %            |   |   | 292   |       |  |  | 4  | %  
|                                     |                         |                  |       |                       |  |          |    |              |   |   |       |       |  |  |    |    
|                                     | Total loan distribution |                  | $     | 13,060                |  |          |    | 100          | % |   | $     | 8,265 |  |  |    | 100 | %
|                                     |                         |                  |       |                       |  |          |    |              |   |   |       |       |  |  |    |    



---



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

In conjunction with the sale of mortgage loans in
private-label securitizations and GSE transactions, the Company
generally retains certain assets. The primary assets retained
include MSRs and, to a lesser degree, AAA-rated and agency
interest-only 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
$102.1 million in gain on sale of loans earned during the
three months ended June 30, 2003 included the retention of
$87.1 million of servicing-related assets. Cash flow
collected during the three months ended June 30, 2003 from
assets previously retained amounted to $21.7 million. More
information on the valuation assumptions related to
IndyMacs retained assets can be found on page 25.




INVESTING ACTIVITIES

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

The Investment Portfolio Groups investment
in prime SFR loans, mortgage-backed securities and mortgage loan
servicing also helps to provide a source of income to
counterbalance the cyclical nature of mortgage production.
Should loan production decline due to factors such as increasing
interest rates, the value 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
generally decreases. We believe this serves to stabilize the
Companys revenue stream through increased interest income
and servicing fees when production slows.

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

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##### Table of Contents



The following table shows average annualized net
returns for all of our investing activities, which is calculated
by dividing the sum of net interest income after allocated
interest expense (see Note 4: Segment Reporting
in the accompanying notes to the consolidated financial
statements for further information on our method of allocating
interest expense to the operating segments) and provision for
loan losses, service fee income and related net gains or losses
by the average balance of investment assets. Service fee income
includes 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,
|                                                                                  |  | 2003                   |           | 2002     |  | 2003     
|                                                                                  |  |                        |           |          |  |          
|                                                                                  |  |                       
|                                                                                  |  | (Dollars in thousands)
|Net interest income after provision for loan
    losses                           |  | $                      | 28,666    |          |  | $         | 35,766    |   |  | $ | 36,190    |  
|Service fee (loss) income                                                         |  |                        | (1,401    | )        |  |           | 6,405     |   |  |   | 2,383     |  
|(Loss) gain on mortgage-backed securities, net                                    |  |                        | (9,258    | )        |  |           | 2,701     |   |  |   | (6,910    | )
|Other income                                                                      |  |                        | 2,761     |          |  |           | 2,716     |   |  |   | 2,493     |  
|Average balance of interest-earning assets and
    MSRs                           |  | $                      | 6,443,855 |          |  | $         | 4,973,972 |   |  | $ | 6,211,387 |  
|Investing activities return on
    interest-earning assets and MSRs (annualized) |  |                        | 1.29      | %        |  |           | 3.84      | % |  |   | 2.23      | %
|                                                                                  |  |                        |           |          |  |           |           |   |  |   |           |  

|                                                                                  |  |                        |           |          |  |   |           |  
|--------------------------------------------------------------------------------- |  | ---------------------- | --------- | -------- |  | - | --------- | -
|                                                                                  |  |                       
|                                                                                  |  | Six Months Ended      
|                                                                                  |  |                       
|                                                                                  |  | June 30,               |           | June 30,
|                                                                                  |  | 2003                   |           | 2002    
|                                                                                  |  |                        |           |         
|                                                                                  |  |                       
|                                                                                  |  | (Dollars in thousands)
|Net interest income after provision for loan
    losses                           |  | $                      | 64,856    |          |  | $ | 74,176    |  
|Service fee income                                                                |  |                        | 982       |          |  |   | 14,227    |  
|Loss on mortgage-backed securities, net                                           |  |                        | (16,168   | )        |  |   | (4,287    | )
|Other income                                                                      |  |                        | 5,255     |          |  |   | 6,089     |  
|Average balance of interest-earning assets and
    MSRs                           |  | $                      | 6,327,621 |          |  | $ | 4,929,896 |  
|Investing activities return on
    interest-earning assets and MSRs (annualized) |  |                        | 1.75      | %        |  |   | 3.69      | %
|                                                                                  |  |                        |           |          |  |   |           |  

The decrease in margin results from the impact of
higher prepayment rates on MSRs and mortgage-backed securities
in this low interest rate environment.

20



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##### Table of Contents






Investment Portfolio Group

The following table sets forth the composition of
the Investment Portfolio Groups assets as of June 30,
2003 and December 31, 2002, respectively.

|                                                              |                               |                                               |                                                    |              |           |           |           |   |           |           | 
|------------------------------------------------------------- | ----------------------------- | --------------------------------------------- | -------------------------------------------------- | ------------ | --------- | --------- | --------- | - | --------- | --------- | 
|                                                              |                               | June 30,                                      |                                                    | December 31,
|                                                              |                               | 2003                                          |                                                    | 2002        
|                                                              |                               |                                               |                                                    |             
|                                                              |                               |                                              
|                                                              |                               | (Dollars in thousands)                       
|SFR mortgage loans held for
    investment                    |                               | $                                             | 2,465,393                                          |              |           | $         | 2,096,517 |  
|SFR mortgage loans held for sale                              |                               |                                               | 360,515                                            |              |           |           |          |  
|Mortgage-backed and U.S. Treasury
    securities:             |                               |                                               |                                                    |              |           |           |           |  
|                                                              | Trading securities            |                                               |                                                    |              |           |           |           |   |          
|                                                              |                               | AAA-rated and agency interest-only securities |                                                    |              | 135,264   |           |           |   | 187,060   |          
|                                                              |                               | AAA-rated principal-only securities           |                                                    |              | 4,255     |           |           |   | 79,554    |          
|                                                              |                               | U.S. Treasury securities                      |                                                    |              | 50,414    |           |           |   | 282,219   |          
|                                                              |                               | AAA-rated non-agency securities               |                                                    |              |          |           |           |   | 101,185   |          
|                                                              |                               | AAA-rated agency securities                   |                                                    |              |          |           |           |   | 25,055    |          
|                                                              |                               | Other investment grade securities             |                                                    |              | 8,760     |           |           |   | 9,114     |          
|                                                              |                               | Other non-investment grade securities         |                                                    |              | 2,060     |           |           |   | 2,956     |          
|                                                              |                               | Residual securities                           |                                                    |              | 66,031    |           |           |   | 78,740    |          
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Subtotal  trading securities                      |              |           | 266,784   |           |   |           | 765,883   | 
|                                                              | Available for sale securities |                                               |                                                    |              |           |           |           |   |          
|                                                              |                               | AAA-rated non-agency securities               |                                                    |              | 1,070,270 |           |           |   | 1,406,321 |          
|                                                              |                               | AAA-rated agency securities                   |                                                    |              | 46,544    |           |           |   | 123,269   |          
|                                                              |                               | Other investment grade securities             |                                                    |              | 33,272    |           |           |   | 39,258    |          
|                                                              |                               | Other non-investment grade securities         |                                                    |              | 8,653     |           |           |   | 4,362     |          
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Subtotal  available for sale securities           |              |           | 1,158,739 |           |   |           | 1,573,210 | 
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Total mortgage-backed and U.S. Treasury securities |              |           | 1,425,523 |           |   |           | 2,339,093 | 
|Mortgage servicing rights                                     |                               |                                               | 335,727                                            |              |           |           | 300,539   |  
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|                                                              |                               |                                               | Total                                              |              | $         | 4,587,158 |           |   | $         | 4,736,149 | 
|                                                              |                               |                                               |                                                    |              |           |           |           |  
|Percentage of securities portfolio rated
    investment grade |                               |                                               | 95                                                 | %            |           |           | 96        | %
|Percentage of securities portfolio rated AAA                  |                               |                                               | 92                                                 | %            |           |           | 94        | %

AAA-rated and agency interest-only securities and
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 are classified as available for
sale.

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 loans to mitigate
interest rate risk. The Company is focused 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 tends to be more cyclical.
During the quarter, the Company added $798 million of
mortgage loans in accordance with this strategy. The following
table shows

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the composition of this portfolio as of
June 30, 2003 and December 31, 2002, respectively, and
relevant credit quality characteristics at June 30, 2003.


|                                                  |                               |                        |           |              |     |   |           |   |  | 
|------------------------------------------------- | ----------------------------- | ---------------------- | --------- | ------------ | --- | - | --------- | - |  | 
|                                                  |                               | June 30,               |           | December 31,
|                                                  |                               | 2003                   |           | 2002        
|                                                  |                               |                        |           |             
|                                                  |                               |                       
|                                                  |                               | (Dollars in thousands)
|SFR mortgage loans held for investment            |                               | $                      | 2,465,393 |              |     | $ | 2,096,517 |  
|Average loan size                                 |                               |                        | 267       |              |     |   | 227       |  
|Non-performing loans as a percentage of SFR loans |                               |                        | 0.74      | %            |     |   | 1.20      | %
|Estimated average life in years(1)                |                               |                        | 3.13      |              |     |   | 3.36      |  
|Estimated average duration in years(2)            |                               |                        | 0.98      |              |     |   | 1.39      |  
|Yield                                             |                               |                        | 4.70      | %            |     |   | 5.69      | %
|Fixed-rate mortgages                              |                               |                        | 11        | %            |     |   | 23        | %
|Adjustable-rate mortgages                         |                               |                        | 32        | %            |     |   | 28        | %
|Hybrid adjustable-rate mortgages                  |                               |                        | 57        | %            |     |   | 49        | %
|Additional Information as of June 30,
    2003   
|                                                 
|Average FICO score(3)                             |                               |                        | 706       |              |     |   |           |  
|Average loan to value ratio                       |                               |                        | 72        | %            |     |   |           |  
|Geographic distribution:                          |                               |                        |           |              |     |   |           |  
|                                                  | Southern California           |                        |           | 38           | %   |   |           |   | 
|                                                  | Northern California           |                        |           | 23           | %   |   |           |   | 
|                                                  | New York                      |                        |           | 5            | %   |   |           |   | 
|                                                  | Michigan                      |                        |           | 4            | %   |   |           |   | 
|                                                  | Florida                       |                        |           | 2            | %   |   |           |   | 
|                                                  | Colorado                      |                        |           | 2            | %   |   |           |   | 
|                                                  | Other (each individually< 2%) |                        |           | 26           | %   |   |           |   | 
|                                                  |                               |                        |           |              |     |   |           |  
|                                                  |                               | Total                  |           |              | 100 | % |           |   |  | 
|                                                  |                               |                        |           |              |     |   |           |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the estimated length of time, on
    average, the SFR loan portfolio will remain outstanding based on
    the Banks estimates for prepayments.                                                                                                                                                                                                                                                             
|   
|(2) | Average duration measures the expected
    variability of the value of a financial instrument in response
    to changes in interest rates.                                                                                                                                                                                                                                                                            
|   
|(3) | FICO scores reflect 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.

SFR Mortgage Loans Held for
Sale

Loans held for sale in the Investment Portfolio
Group are substantially comprised of SFR mortgage loans acquired
through exercising our right to call selected transactions as
Master Servicer when the outstanding loan balances in the
securitization trust declines to a specified level, typically
10% of the original collateral balance. During the quarter ended
June 30, 2003, we sold approximately $158 million of
loans acquired through clean-up call exercises for a pretax gain
of $7.7 million. The balance at June 30, 2003 in loans
held for sale for the Investment Portfolio Group represents the
inventory of called loans that remain unsold. We expect to
exercise our option to call additional loans of approximately
$500 million during the remainder of the year, the exact
timing and amount of which is dependent upon the future interest
rate environment and borrower prepayment behavior. We currently
expect that gains in the second half of 2003 will be consistent
with the results of the first six months of 2003.

22



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##### Table of Contents



Mortgage-backed Securities and U.S.
Treasury Securities

The Companys portfolio of mortgage-backed
securities and U.S. Treasury securities totaled
$1.4 billion and $2.3 billion at June 30, 2003
and December 31, 2002, respectively. These securities are
recorded at fair value. The Company invests in high quality
mortgage-backed securities to provide net interest income. The
extreme prepayment environment has negatively impacted interest
spreads on these securities. At June 30, 2003, 92% of the
portfolio was rated AAA with an expected weighted average life
of 3.2 years. U.S. Treasury securities in the trading
portfolio 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 securities purchased in the secondary market to hedge MSR
related assets. The Company actively trades its hedging
instruments to rebalance its portfolio into instruments we
believe will most effectively hedge the underlying asset.

The fair value of other investment grade and
non-investment grade securities by credit rating as of
June 30, 2003 and December 31, 2002 follows:

|                                                                |  |                        |        |              |  |           |         |       |  |            |        |  |  |   |        |  |  |   |        | 
|--------------------------------------------------------------- |  | ---------------------- | ------ | ------------ |  | --------- | ------- | ----- |  | ---------- | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                                                |  |                        |        |             
|                                                                |  | June 30,               |        | December 31,
|                                                                |  | 2003                   |        | 2002        
|                                                                |  |                        |        |             
|                                                                |  | Current                |        | Discount     |  |           |         |      
|                                                                |  | Face                   |        | To Face      |  | Amortized |         | Fair  |  |           
|                                                                |  | Value                  |        | Value        |  | Cost      |         | Value |  | Fair Value
|                                                                |  |                        |        |              |  |           |         |       |  |           
|                                                                |  |                       
|                                                                |  | (Dollars in thousands)
|Investment grade mortgage-backed
    securities                 |  |                        |        |              |  |           |         |       |  |            |        |  |  |   |        |  |  |   |        | 
|AAA                                                             |  | $                      | 8,163  |              |  | $         | 83      |       |  | $          | 8,246  |  |  | $ | 8,250  |  |  | $ |       | 
|AA                                                              |  |                        | 11,739 |              |  |           | (172    | )     |  |            | 11,567 |  |  |   | 11,883 |  |  |   | 22,133 | 
|A                                                               |  |                        | 2,187  |              |  |           | (121    | )     |  |            | 2,066  |  |  |   | 2,225  |  |  |   | 2,445  | 
|BBB                                                             |  |                        | 16,833 |              |  |           | (1,019  | )     |  |            | 15,814 |  |  |   | 16,040 |  |  |   | 18,450 | 
|BBB-                                                            |  |                        | 4,000  |              |  |           | (365    | )     |  |            | 3,635  |  |  |   | 3,634  |  |  |   | 5,344  | 
|                                                                |  |                        |        |              |  |           |         |       |  |            |        |  |  |   |        |  |  |   |        | 
|Total other investment grade mortgage-backed
    securities     |  | $                      | 42,922 |              |  | $         | (1,594  | )     |  | $          | 41,328 |  |  | $ | 42,032 |  |  | $ | 48,372 | 
|                                                                |  |                        |        |              |  |           |         |       |  |            |        |  |  |   |        |  |  |   |        | 
|Non-investment grade mortgage-backed
    securities             |  |                        |        |              |  |           |         |       |  |            |        |  |  |   |        |  |  |   |        | 
|BB                                                              |  | $                      | 4,713  |              |  | $         | (725    | )     |  | $          | 3,988  |  |  | $ | 3,986  |  |  | $ | 3,661  | 
|BB-                                                             |  |                        | 1,768  |              |  |           | (942    | )     |  |            | 826    |  |  |   | 818    |  |  |   |       | 
|B                                                               |  |                        | 3,563  |              |  |           | (2,136  | )     |  |            | 1,427  |  |  |   | 1,724  |  |  |   | 351    | 
|CCC                                                             |  |                        | 6,234  |              |  |           | (4,668  | )     |  |            | 1,566  |  |  |   | 1,618  |  |  |   | 2,955  | 
|C                                                               |  |                        | 7,741  |              |  |           | (5,585  | )     |  |            | 2,156  |  |  |   | 2,218  |  |  |   |       | 
|NR                                                              |  |                        | 871    |              |  |           | (548    | )     |  |            | 323    |  |  |   | 349    |  |  |   | 351    | 
|                                                                |  |                        |        |              |  |           |         |       |  |            |        |  |  |   |        |  |  |   |        | 
|Total other non-investment grade mortgage-backed
    securities |  | $                      | 24,890 |              |  | $         | (14,604 | )     |  | $          | 10,286 |  |  | $ | 10,713 |  |  | $ | 7,318  | 
|                                                                |  |                        |        |              |  |           |         |       |  |            |        |  |  |   |        |  |  |   |        | 

At June 30, 2003, of the total other
investment grade and non-investment grade mortgage-backed
securities, $40.0 million was collateralized by prime
loans, $10.6 million by subprime loans and
$2.1 million by manufactured housing loans.

Mortgage Servicing and Mortgage Servicing
Rights

In addition to its own loans, IndyMac serviced
$29.9 billion of mortgage loans owned by others at
June 30, 2003 with a weighted average coupon of 6.97%. In
comparison, IndyMac serviced $28.4 billion of mortgage
loans at December 31, 2002. The table below shows the
activity in the servicing portfolio during the quarter and six
months ended June 30, 2003.

23



---



##### Table of Contents



|                                                |  |                       |        |                     |  |   |        |  
|----------------------------------------------- |  | --------------------- | ------ | ------------------- |  | - | ------ | -
|                                                |  | Three Months          |        | Six Months         
|                                                |  | Ended                 |        | Ended              
|                                                |  | June 30, 2003         |        | June 30, 2003      
|                                                |  |                       |        |                    
|                                                |  | Servicing Portfolio   |        | Servicing Portfolio
|                                                |  |                       |        |                    
|                                                |  |                      
|                                                |  | (Dollars in millions)
|Unpaid principal balance at beginning of period |  | $                     | 29,835 |                     |  | $ | 28,376 |  
|Additions                                       |  |                       | 5,334  |                     |  |   | 10,655 |  
|Clean-up calls exercised                        |  |                       | (381   | )                   |  |   | (932   | )
|Loan payments and prepayments                   |  |                       | (4,930 | )                   |  |   | (8,241 | )
|                                                |  |                       |        |                     |  |   |        |  
|Unpaid principal balance at June 30, 2003       |  | $                     | 29,858 |                     |  | $ | 29,858 |  
|                                                |  |                       |        |                     |  |   |        |  

MSRs totaled $335.7 million as of
June 30, 2003 and $300.5 million as of
December 31, 2002, reflecting an increase of
$35.2 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,
|                                                           |  | 2003                   |         | 2002             |  | 2003      |         | 2003     |  | 2002    
|                                                           |  |                        |         |                  |  |           |         |          |  |         
|                                                           |  |                       
|                                                           |  | (Dollars in thousands)
|Balance at beginning of period                             |  | $                      | 343,544 |                  |  | $         | 390,131 |          |  | $        | 300,539 |   |  | $ | 300,539 |   |  | $ | 321,316 |  
|Additions                                                  |  |                        | 73,732  |                  |  |           | 52,473  |          |  |          | 67,742  |   |  |   | 141,474 |   |  |   | 125,141 |  
|Transfers to AAA-rated agency interest-only
    securities |  |                        | (17,812 | )                |  |           | (63,690 | )        |  |          |        |   |  |   | (17,812 | ) |  |   | (66,288 | )
|Clean-up calls exercised                                   |  |                        | (1,481  | )                |  |           |        |          |  |          | (2,475  | ) |  |   | (3,956  | ) |  |   |        |  
|Scheduled amortization                                     |  |                        | (21,832 | )                |  |           | (16,958 | )        |  |          | (21,150 | ) |  |   | (42,982 | ) |  |   | (35,811 | )
|Valuation/ impairment                                      |  |                        | (40,424 | )                |  |           | (45,177 | )        |  |          | (1,112  | ) |  |   | (41,536 | ) |  |   | (27,579 | )
|                                                           |  |                        |         |                  |  |           |         |          |  |          |         |   |  |   |         |   |  |   |         |  
|Balance at end of period                                   |  | $                      | 335,727 |                  |  | $         | 316,779 |          |  | $        | 343,544 |   |  | $ | 335,727 |   |  | $ | 316,779 |  
|                                                           |  |                        |         |                  |  |           |         |          |  |          |         |   |  |   |         |   |  |   |         |  

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 periodically validated by third party opinions of
value. If the carrying value exceeds the fair value by
individual stratum, a valuation allowance is recorded as a
charge to service fee income in current earnings. However, if
such impairment is determined to be other-than-temporary and the
recoverability of the value is remote, we recognize a direct
write-down. Unlike a valuation allowance, a direct write-down
permanently reduces the carrying value of the MSR asset and the
related valuation allowance, precluding subsequent reversals.
For the six months ended June 30, 2003, we recorded a
direct write-down of MSRs totaling $102.7 million, which
was written off against the valuation allowance previously
provided. We did not record any direct write-down of MSRs during
the three months ended June 30, 2003. As of June 30,
2003, the valuation allowance on MSRs totaled
$107.2 million.

AAA-Rated and Agency Interest-Only
Securities and Residuals

We evaluate the carrying value of our AAA-rated
and agency interest-only securities 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 and
non-investment grade securities.

24



---



##### Table of Contents



A summary of the activity in the AAA-rated and
agency interest-only securities and residual securities
portfolios for the three and six months ended June 30, 2003
and 2002 and for the three months ended March 31, 2003,
follows:

|                                                  |                                           |                        |   |                  |   |           |   |          |   |          |   |         |   |  |   |         |   |  |   |         |  
|------------------------------------------------- | ----------------------------------------- | ---------------------- | - | ---------------- | - | --------- | - | -------- | - | -------- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                  |                                           |                        |   |                 
|                                                  |                                           | Three Months Ended     |   | Six Months Ended
|                                                  |                                           |                        |   |                 
|                                                  |                                           | June 30,               |   | June 30,         |   | March 31, |   | June 30, |   | June 30,
|                                                  |                                           | 2003                   |   | 2002             |   | 2003      |   | 2003     |   | 2002    
|                                                  |                                           |                        |   |                  |   |           |   |          |   |         
|                                                  |                                           |                       
|                                                  |                                           | (Dollars in thousands)
|AAA-rated and agency interest-only
    securities |                                           |                        |   |                  |   |           |   |          |   |          |   |         |   |  |   |         |   |  |   |        
|                                                  | Beginning balance                         |                        | $ | 156,212          |   |           | $ | 192,932  |   |          | $ | 187,060 |   |  | $ | 187,060 |   |  | $ | 211,104 |  
|                                                  | Retained investments from securitizations |                        |   | 12,017           |   |           |   | 2,092    |   |          |   | 13,416  |   |  |   | 25,433  |   |  |   | 2,092   |  
|                                                  | Transfers from MSRs                       |                        |   | 17,812           |   |           |   | 63,690   |   |          |   |        |   |  |   | 17,812  |   |  |   | 66,288  |  
|                                                  | Clean-up calls exercised                  |                        |   | (7,077           | ) |           |   |         |   |          |   | (12,048 | ) |  |   | (19,125 | ) |  |   |        |  
|                                                  | Cash received, net of accretion           |                        |   | (13,629          | ) |           |   | (11,269  | ) |          |   | (14,071 | ) |  |   | (27,699 | ) |  |   | (21,353 | )
|                                                  | Valuation losses before hedges            |                        |   | (30,071          | ) |           |   | (15,291  | ) |          |   | (18,145 | ) |  |   | (48,217 | ) |  |   | (25,977 | )
|                                                  |                                           |                        |   |                  |   |           |   |          |   |          |   |         |   |  |   |         |   |  |   |        
|                                                  | Ending balance                            |                        | $ | 135,264          |   |           | $ | 232,154  |   |          | $ | 156,212 |   |  | $ | 135,264 |   |  | $ | 232,154 |  
|                                                  |                                           |                        |   |                  |   |           |   |          |   |          |   |         |   |  |   |         |   |  |   |        
|Residual securities                               |                                           |                        |   |                  |   |           |   |          |   |          |   |         |   |  |   |         |   |  |   |        
|                                                  | Beginning balance                         |                        | $ | 77,998           |   |           | $ | 55,395   |   |          | $ | 78,740  |   |  | $ | 78,740  |   |  | $ | 43,123  |  
|                                                  | Retained investments from securitizations |                        |   | 112              |   |           |   | 17,497   |   |          |   | 14,626  |   |  |   | 14,738  |   |  |   | 31,553  |  
|                                                  | Sales                                     |                        |   |                 |   |           |   |         |   |          |   | (10,525 | ) |  |   | (10,525 | ) |  |   |        |  
|                                                  | Cash received, net of accretion           |                        |   | (6,189           | ) |           |   | (5,607   | ) |          |   | (6,865  | ) |  |   | (13,054 | ) |  |   | (8,430  | )
|                                                  | Valuation (losses) gains before hedges    |                        |   | (5,890           | ) |           |   | 707      |   |          |   | 2,022   |   |  |   | (3,868  | ) |  |   | 1,746   |  
|                                                  |                                           |                        |   |                  |   |           |   |          |   |          |   |         |   |  |   |         |   |  |   |        
|                                                  | Ending balance                            |                        | $ | 66,031           |   |           | $ | 67,992   |   |          | $ | 77,998  |   |  | $ | 66,031  |   |  | $ | 67,992  |  
|                                                  |                                           |                        |   |                  |   |           |   |          |   |          |   |         |   |  |   |         |   |  |   |        

Valuation of Servicing-Related
Assets

AAA-rated and agency interest-only securities and
residual securities are recorded at fair market value. MSRs are
subject to lower of cost or market limitations. We determine the
fair value of MSRs using our valuation models, which are
periodically validated by third party opinions of value.
Relevant information and assumptions used to value the
Companys servicing related assets at June 30, 2003,
March 31, 2003 and December 31, 2002 are shown below.

|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|--------------------------------------------- |  | ---------------------- | ------- | --------------------- |  | --------- | ---------- | ------------ |  | ---------- | ---- | -------- |  | ---------- | ---- | ---------- |  | --------- | ---- | ------------ |  |  | ---- |  |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | --- | -
|                                              |  |                        |         |                      
|                                              |  | Actual                 |         | Valuation Assumptions
|                                              |  |                        |         |                      
|                                              |  |                        |         | Gross Wtd.            |  | Servicing |            | 3-Month      |  | Weighted   |      | Lifetime |  | 3-Month    |      |            |  | Remaining
|                                              |  | Book                   |         | Collateral            |  | Average   |            | Fee/Interest |  | Prepayment |      | Average  |  | Prepayment |      | Prepayment |  | Discount  |      | Cumulative  
|                                              |  | Value                  |         | Balance               |  | Coupon    |            | Strip        |  | Speeds     |      | Multiple |  | Speeds(1)  |      | Speeds(1)  |  | Yield     |      | Loss Rate(2)
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |             
|                                              |  |                       
|                                              |  | (Dollars in thousands)
|June 30, 2003                                 |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated and agency interest-only securities |  | $                      | 135,264 |                       |  | $         | 14,684,652 |              |  |            | 7.30 | %        |  |            | 0.44 | %          |  |           | 42.5 | %            |  |  | 2.09 |  |  |  | 24.5 | % |  |  | 51.3 | % |  |  | 7.6  | % |  |  | N/A |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                     |  | $                      | 32,211  |                       |  | $         | 3,422,320  |              |  |            | 7.22 | %        |  |            | 1.24 | %          |  |           | 55.3 | %            |  |  | 0.76 |  |  |  | 24.8 | % |  |  | 53.9 | % |  |  | 15.2 | % |  |  | 0.5 | %
|Sub-prime residual securities                 |  |                        | 33,820  |                       |  | $         | 1,430,135  |              |  |            | 9.24 | %        |  |            | 4.20 | %          |  |           | 37.9 | %            |  |  | 0.56 |  |  |  | 33.2 | % |  |  | 34.4 | % |  |  | 22.7 | % |  |  | 2.5 | %
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total noninvestment grade residual securities |  | $                      | 66,031  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs(3)(4)                                    |  | $                      | 335,727 |                       |  | $         | 29,858,219 |              |  |            | 6.97 | %        |  |            | 0.33 | %          |  |           | 46.6 | %            |  |  | 3.41 |  |  |  | 25.6 | % |  |  | 48.6 | % |  |  | 9.1  | % |  |  | N/A |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|March 31, 2003                                |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated and agency interest-only securities |  | $                      | 156,212 |                       |  | $         | 12,924,037 |              |  |            | 7.68 | %        |  |            | 0.51 | %          |  |           | 38.8 | %            |  |  | 2.37 |  |  |  | 21.9 | % |  |  | 46.6 | % |  |  | 8.9  | % |  |  | N/A |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                     |  | $                      | 42,703  |                       |  | $         | 3,537,589  |              |  |            | 7.27 | %        |  |            | 1.46 | %          |  |           | 38.5 | %            |  |  | 0.83 |  |  |  | 21.8 | % |  |  | 36.1 | % |  |  | 15.2 | % |  |  | 0.6 | %
|Sub-prime residual securities                 |  |                        | 35,295  |                       |  | $         | 1,636,487  |              |  |            | 9.34 | %        |  |            | 4.04 | %          |  |           | 34.0 | %            |  |  | 0.53 |  |  |  | 33.3 | % |  |  | 35.7 | % |  |  | 22.9 | % |  |  | 2.6 | %
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total noninvestment grade residual securities |  | $                      | 77,998  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs(4)                                       |  | $                      | 343,544 |                       |  | $         | 29,834,709 |              |  |            | 7.27 | %        |  |            | 0.33 | %          |  |           | 39.5 | %            |  |  | 3.49 |  |  |  | 21.2 | % |  |  | 42.9 | % |  |  | 9.5  | % |  |  | N/A |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  

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|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|--------------------------------------------- |  | ---------------------- | ------- | --------------------- |  | --------- | ---------- | ------------ |  | ---------- | ---- | -------- |  | ---------- | ---- | ---------- |  | --------- | ---- | ------------ |  |  | ---- |  |  |  | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | --- | -
|                                              |  |                        |         |                      
|                                              |  | Actual                 |         | Valuation Assumptions
|                                              |  |                        |         |                      
|                                              |  |                        |         | Gross Wtd.            |  | Servicing |            | 3-Month      |  | Weighted   |      | Lifetime |  | 3-Month    |      |            |  | Remaining
|                                              |  | Book                   |         | Collateral            |  | Average   |            | Fee/Interest |  | Prepayment |      | Average  |  | Prepayment |      | Prepayment |  | Discount  |      | Cumulative  
|                                              |  | Value                  |         | Balance               |  | Coupon    |            | Strip        |  | Speeds     |      | Multiple |  | Speeds(1)  |      | Speeds(1)  |  | Yield     |      | Loss Rate(2)
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |             
|                                              |  |                       
|                                              |  | (Dollars in thousands)
|December 31, 2002                             |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|AAA-rated and agency interest-only securities |  | $                      | 187,060 |                       |  | $         | 14,214,229 |              |  |            | 7.77 | %        |  |            | 0.53 | %          |  |           | 38.5 | %            |  |  | 2.48 |  |  |  | 23.6 | % |  |  | 39.7 | % |  |  | 8.7  | % |  |  | N/A |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Prime residual securities                     |  | $                      | 33,400  |                       |  | $         | 2,968,794  |              |  |            | 7.51 | %        |  |            | 1.44 | %          |  |           | 35.5 | %            |  |  | 0.78 |  |  |  | 18.9 | % |  |  | 40.3 | % |  |  | 15.2 | % |  |  | 0.7 | %
|Sub-prime residual securities                 |  |                        | 45,340  |                       |  | $         | 1,968,041  |              |  |            | 9.54 | %        |  |            | 4.21 | %          |  |           | 30.3 | %            |  |  | 0.55 |  |  |  | 32.1 | % |  |  | 35.0 | % |  |  | 27.1 | % |  |  | 2.8 | %
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|Total noninvestment grade residual securities |  | $                      | 78,740  |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  
|MSRs(4)                                       |  | $                      | 300,539 |                       |  | $         | 28,375,897 |              |  |            | 7.56 | %        |  |            | 0.33 | %          |  |           | 40.7 | %            |  |  | 3.21 |  |  |  | 22.0 | % |  |  | 36.3 | % |  |  | 9.5  | % |  |  | N/A |  
|                                              |  |                        |         |                       |  |           |            |              |  |            |      |          |  |            |      |            |  |           |      |              |  |  |      |  |  |  |      |   |  |  |      |   |  |  |      |   |  |  |     |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Assumed prepayment speeds are higher in the short
    term and lower in the long term based on the market forward
    curve for interest rates rising over the life of the asset.                                                                                                                                                                                                                                                                                                 
|   
|(2) | As a percentage of the original pool balance, the
    actual cumulative loss rate to date totaled 0.08% and 1.23% for
    prime and subprime residuals, respectively, at June 30,
    2003.                                                                                                                                                                                                                                                                                       
|   
|(3) | At June 30, 2003, the capitalized servicing
    asset includes primary servicing of $28.7 billion of loans
    serviced by us and master servicing of $1.1 billion whose
    primary servicing is performed by other servicers. In addition
    to the primary servicing of $28.7 billion in loans, we also
    service $4.2 billion of IndyMac-owned loans and loans
    subserviced for others on an interim basis for a total primary
    servicing portfolio of $33.0 billion.
|   
|(4) | Our collateral balance includes primary and
    master serviced loans of $28.7 billion and
    $1.1 billion, respectively at June 30, 2003. In
    comparison, we had primary and master serviced loans of
    $28.2 billion and $1.6 billion, respectively at
    March 31, 2003. At December 31, 2002, we had primary
    and master serviced loans of $25.8 billion and
    $2.6 billion, respectively.                                                                        

The lifetime prepayment speeds represent the
annualized 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
securities, we project prepayment rates using four-factor
prepayment models which incorporate relative weighted average
note rate, seasoning, seasonality and burn-out of the pool of
loans relative to expectations of future rates implied by the
market forward LIBOR/swap curve.

The weighted average multiple for MSRs, AAA-rated
and agency interest-only 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 securities, 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.

Lifetime prepayment assumptions for AAA-rated and
agency interest-only, prime residuals and mortgage servicing
increased at June 30, 2003 compared to March 31, 2003
reflecting the decline in interest rates from March to June and
the higher actual prepayment speeds experienced in the second
quarter. Discount yields decreased at June 30, 2003 as
compared to March 31, 2003 also reflecting the decline in
interest rates as well as a shorter weighted average life of the
assets and lower option costs.

Hedging Interest Rate Risk on
Servicing-Related Assets

With respect to the investment in
servicing-related assets (AAA-rated and agency interest-only
securities, 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

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##### Table of Contents



(ALCO) and Board of Directors level
ALCO. To hedge our investments in servicing-related assets, we
use several strategies, including investing in AAA-rated
principal-only securities, buying and/or selling mortgage-backed
or U.S. Treasury securities, futures, floors, swaps, or options,
depending on several factors.


Temporary impairment as a result of accelerated
prepayments on the servicing-related assets totaled
$76.4 million in the second quarter of 2003. These losses
were offset by $60.8 million of gains on trading securities
and derivative instruments utilized to hedge the interest rate
risk on the servicing-related assets and $0.9 million of
net interest income earned on the hedging instruments.

The following breaks out the components of
service fee income and the gain on mortgage-backed securities,
net.

|                              |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |         |        |  
|----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | - | ---------------- | ------ | --------- | - | -------- | ----- | -------- | - | ------- | ------ | - | - | ------- | ------- | - | - | ------- | ------ | -
|                              |                                                                                                                                       |                                                          |   |                 
|                              |                                                                                                                                       | Three Months Ended                                       |   | Six Months Ended
|                              |                                                                                                                                       |                                                          |   |                 
|                              |                                                                                                                                       | June 30,                                                 |   | June 30,         |        | March 31, |   | June 30, |       | June 30,
|                              |                                                                                                                                       | 2003                                                     |   | 2002             |        | 2003      |   | 2003     |       | 2002    
|                              |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |         
|                              |                                                                                                                                       |                                                         
|                              |                                                                                                                                       | (Dollars in thousands)                                  
|Service fee income            |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |        
|                              | Gross service fee income                                                                                                              |                                                          | $ | 25,510           |        |           | $ | 25,907   |       |          | $ | 24,057  |        |   | $ | 49,567  |         |   | $ | 51,987  |       
|                              | Amortization                                                                                                                          |                                                          |   | (21,832          | )      |           |   | (16,958  | )     |          |   | (21,150 | )      |   |   | (42,982 | )       |   |   | (35,811 | )     
|                              |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |        
|                              | Service fee income net of amortization                                                                                                |                                                          |   | 3,678            |        |           |   | 8,949    |       |          |   | 2,907   |        |   |   | 6,585   |         |   |   | 16,176  |       
|                              | Valuation adjustments on MSRs                                                                                                         |                                                          |   | (40,424          | )      |           |   | (45,177  | )     |          |   | (1,112  | )      |   |   | (41,536 | )       |   |   | (27,579 | )     
|                              | Hedges gains                                                                                                                          |                                                          |   | 35,345           |        |           |   | 42,633   |       |          |   | 588     |        |   |   | 35,933  |         |   |   | 25,630  |       
|                              |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |        
|                              |                                                                                                                                       | Total service fee (expense) income                       |   | $                | (1,401 | )         |   | $        | 6,405 |          |   | $       | 2,383  |   |   | $       | 982     |   |   | $       | 14,227 |  
|                              |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |        
|Net (loss) gain on securities |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |        
|                              | Realized gain on available-for-sale securities                                                                                        |                                                          | $ | 2,022            |        |           | $ | 4,857    |       |          | $ |        |        |   | $ | 2,022   |         |   | $ | 7,477   |       
|                              | Impairment on available-for-sale securities                                                                                           |                                                          |   | (808             | )      |           |   | (1,931   | )     |          |   | (580    | )      |   |   | (1,388  | )       |   |   | (2,431  | )     
|                              | Unrealized loss on AAA-rated and agency interest
    only and residual securities                                                     |                                                          |   | (35,962          | )      |           |   | (15,291  | )     |          |   | (16,123 | )      |   |   | (52,085 | )       |   |   | (25,977 | )     
|                              | Net gain on trading securities and other
    instruments used to hedge AAA-rated and agency interest only and
    residual securities |                                                          |   | 25,490           |        |           |   | 15,066   |       |          |   | 9,793   |        |   |   | 35,283  |         |   |   | 16,644  |       
|                              |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |        
|                              |                                                                                                                                       | Total (loss) gain on mortgage-backed securities,
    net |   | $                | (9,258 | )         |   | $        | 2,701 |          |   | $       | (6,910 | ) |   | $       | (16,168 | ) |   | $       | (4,287 | )
|                              |                                                                                                                                       |                                                          |   |                  |        |           |   |          |       |          |   |         |        |   |   |         |         |   |   |        

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##### Table of Contents



The following table summarizes the results of our
hedges of our servicing-related assets and hedging activities:

|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |         |        | 
|------------------------------------------------------------------------ | -------- | ---------------------- | ------- | ---------------- | ------ | --------- | ------- | -------- | ------ | -------- | ------- | ------- | ----- | - | ------- | -------- | ------ | - | ------- | ------- | ------ | 
|                                                                         |          |                        |         |                 
|                                                                         |          | Three Months Ended     |         | Six Months Ended
|                                                                         |          |                        |         |                 
|                                                                         |          | June 30,               |         | June 30,         |        | March 31, |         | June 30, |        | June 30,
|                                                                         |          | 2003                   |         | 2002             |        | 2003      |         | 2003     |        | 2002    
|                                                                         |          |                        |         |                  |        |           |         |          |        |         
|                                                                         |          |                       
|                                                                         |          | (Dollars in thousands)
|Gross service fee income                                                 |          | $                      | 25,510  |                  |        | $         | 25,907  |          |        | $        | 24,057  |         |       | $ | 49,567  |          |        | $ | 51,987  |        
|Net interest income on residuals                                         |          |                        | 3,493   |                  |        |           | 3,670   |          |        |          | 3,305   |         |       |   | 6,798   |          |        |   | 6,424   |        
|Net interest income on AAA-rated and agency
    interest only securities |          |                        | 1,286   |                  |        |           | 1,744   |          |        |          | 1,569   |         |       |   | 2,855   |          |        |   | 5,202   |        
|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |        
|                                                                         | Subtotal |                        |         | 30,289           |        |           |         | 31,321   |        |          |         | 28,931  |       |   |         | 59,220   |        |   |         | 63,613  |       
|Amortization of MSRs                                                     |          |                        | (21,832 | )                |        |           | (16,958 | )        |        |          | (21,150 | )       |       |   | (42,982 | )        |        |   | (35,811 | )      
|Net valuation losses                                                     |          |                        | (76,386 | )                |        |           | (60,469 | )        |        |          | (17,235 | )       |       |   | (93,620 | )        |        |   | (53,556 | )      
|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |        
|                                                                         | Subtotal |                        |         | (98,218          | )      |           |         | (77,427  | )      |          |         | (38,385 | )     |   |         | (136,602 | )      |   |         | (89,367 | )     
|Net interest income on cash hedges                                       |          |                        | 874     |                  |        |           | 1,081   |          |        |          | 2,460   |         |       |   | 3,334   |          |        |   | 1,153   |        
|Net hedge gains                                                          |          |                        | 60,835  |                  |        |           | 57,699  |          |        |          | 10,381  |         |       |   | 71,216  |          |        |   | 42,273  |        
|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |        
|                                                                         | Subtotal |                        |         | 61,709           |        |           |         | 58,780   |        |          |         | 12,841  |       |   |         | 74,550   |        |   |         | 43,426  |       
|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |        
|                                                                         |          | Total                  |         | $                | (6,220 | )         |         | $        | 12,674 |          |         | $       | 3,387 |   |         | $        | (2,832 | ) |         | $       | 17,672 | 
|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |        
|Average balance                                                          |          | $                      | 548,172 |                  |        | $         | 615,639 |          |        | $        | 553,290 |         |       | $ | 550,731 |          |        | $ | 599,283 |        
|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |        
|Return                                                                   |          |                        | (4.54   | )%               |        |           | 8.23    | %        |        |          | 2.45    | %       |       |   | (1.03   | )%       |        |   | 5.90    | %      
|                                                                         |          |                        |         |                  |        |           |         |          |        |          |         |         |       |   |         |          |        |   |         |        

The decline in servicing-related income during
the quarter is the result of increased amortization of the
assets due to unprecedented levels of prepayments and reduced
reinvestment income on the cash flows during the period combined
with higher levels of compensating interest on loan payoffs.

Offsetting the reduction in servicing-related
assets, we realized income on the sale of loans obtained through
our right as the Master Servicer for our various
securitizations, to call the securities when the outstanding
loan balance in the securitization trust declines to a specified
level, typically 10%, of the original balance. When the fair
value of remaining loans exceeds expected costs to exercise the
call, we will typically exercise our option. During the second
quarter 2003, we sold approximately $158 million of loans
acquired through clean-up call exercises for a pretax gain of
$7.7 million. We realized a $14.5 million gain on sale
of clean-up call loans for the six months ended June 30,
2003. We also earned $1.9 million in net interest income from
holding these loans prior to sale during the second quarter of
2003.




Construction Lending

IndyMac provides construction financing for
individual consumers who are in the process of building their
own home (consumer construction) and for residential subdivision
developers (builder construction). With respect to consumer
construction, the primary product is a construction-to-permanent
residential mortgage loan. This product provides financing for
the 9-12 month term of construction and automatically
converts to a permanent mortgage loan at the end of
construction. As a result, this product represents a hybrid
activity between our portfolio lending activities and mortgage
banking activities. The Company earns net interest income during
the construction phase. When the loan converts to permanent
status the loan is transferred into the Companys pipeline
of mortgage loans held for sale. These loans are typically
fixed-rate loans. Consumer construction loan origination grew
10% over the first quarter 2003 and 16% over the same quarter of
2002, consistent with seasonal increases in single-family
residence construction. Increases in both origination channels
(B2B and B2C) were driven by growth in active customers and
marketing leads. The cost of funding an HCL construction loan
decreased 7% from the same quarter of 2002 due to the
implementation of several cost efficiency initiatives. Consumer
construction loans outstanding at June 30, 2003 were
$988 million, up 13% compared to the amount at
December 31, 2002.

28



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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. New production is limited to nine
states for new commitments (California, Illinois, Nevada, Utah,
Arizona, Colorado, Washington, Oregon and Florida). Builder
construction loans are typically based on prime rates. Builder
loans outstanding, including construction and land and other
mortgage loans, declined $8.7 million or 1.4% as compared
to December 31, 2002. Commitments related to these
outstanding loans declined $19.1 million or 1.7% over the
same period. This decline is the result of loan payoffs
exceeding new production and is expected to continue through the
fourth quarter 2003.

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

|                                     |  |                        |           |                   |  |              |           |              |  |   |           |   |  |   |           |  
|------------------------------------ |  | ---------------------- | --------- | ----------------- |  | ------------ | --------- | ------------ |  | - | --------- | - |  | - | --------- | -
|                                     |  |                       
|                                     |  | As of                 
|                                     |  |                       
|                                     |  |                        |           |                  
|                                     |  | June 30, 2003          |           | December 31, 2002
|                                     |  |                        |           |                  
|                                     |  | Consumer               |           | Builder           |  | Consumer     |           | Builder     
|                                     |  | Construction           |           | Construction      |  | Construction |           | Construction
|                                     |  | Loans                  |           | Loans             |  | Loans        |           | Loans       
|                                     |  |                        |           |                   |  |              |           |             
|                                     |  |                       
|                                     |  | (Dollars in thousands)
|Construction loans                   |  | $                      | 988,020   |                   |  | $            | 509,196   |              |  | $ | 875,335   |   |  | $ | 482,408   |  
|Land and other mortgage loans        |  | $                      | 137,226   |                   |  | $            | 87,610    |              |  | $ | 81,885    |   |  | $ | 123,066   |  
|Outstanding commitments              |  | $                      | 1,847,554 |                   |  | $            | 1,085,062 |              |  | $ | 1,531,011 |   |  | $ | 1,104,160 |  
|Average construction loan commitment |  | $                      | 393       |                   |  | $            | 2,596     |              |  | $ | 415       |   |  | $ | 1,982     |  
|Non-performing loans                 |  |                        | 0.98      | %                 |  |              | 0.62      | %            |  |   | 1.08      | % |  |   | 2.92      | %
|Yield                                |  |                        | 6.53      | %                 |  |              | 6.75      | %            |  |   | 7.13      | % |  |   | 7.06      | %
|Fixed-rate loans                     |  |                        | 95        | %                 |  |              | 0         | %            |  |   | 94        | % |  |   | 1         | %
|Adjustable-rate loans                |  |                        | 0         | %                 |  |              | 98        | %            |  |   | 0         | % |  |   | 96        | %
|Hybrid adjustable-rate loans         |  |                        | 5         | %                 |  |              | 2         | %            |  |   | 6         | % |  |   | 3         | %

Additional Information as of June 30,
2003

|                               |                               |              |     |     |   |              |                               |  |     |     |  
|------------------------------ | ----------------------------- | ------------ | --- | --- | - | ------------ | ----------------------------- |  | --- | --- | -
|                               |                               | Consumer     |     |     |   | Builder     
|                               |                               | Construction |     |     |   | Construction
|                               |                               | Loans        |     |     |   | Loans       
|                               |                               |              |     |     |   |             
|Average loan to value ratio(1) |                               |              | 73  | %   |   |              |                               |  | 69  | %  
|Average FICO score(2)          |                               |              | 707 |     |   |              |                               |  | N/A |    
|                              
|Geographic distribution(3)     |                               |              |     |     |   |              |                               |  |     |    
|                               | Southern California           |              |     | 32  | % |              | Southern California           |  |     | 38  | %
|                               | Northern California           |              |     | 20  | % |              | Northern California           |  |     | 24  | %
|                               | New York                      |              |     | 7   | % |              | Illinois                      |  |     | 20  | %
|                               | Hawaii                        |              |     | 4   | % |              | Texas                         |  |     | 2   | %
|                               | Florida                       |              |     | 3   | % |              | Colorado                      |  |     | 2   | %
|                               | Colorado                      |              |     | 3   | % |              | Nevada                        |  |     | 2   | %
|                               | Connecticut                   |              |     | 3   | % |              | Florida                       |  |     | 2   | %
|                               | Other (each individually< 2%) |              |     | 28  | % |              | Other (each individually< 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, 2003.
|   
|(2) | FICO scores are not calculated for corporate
    entities and, therefore, are not applicable to the builder
    construction portfolio.                       

29



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##### Table of Contents





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

For information related to the Companys
balance of non-performing assets and related credit reserves,
see discussion in Credit Risk and Reserves at
page 35.




HELOC Portfolio

The following table presents information on our
HELOCs as of June 30, 2003, March 31, 2003 and
December 31, 2002. All HELOC loans are adjustable rate
loans and indexed to the prime rate.

|                           |  |                        |         |           |  |              |         |   |  |   |         |  
|-------------------------- |  | ---------------------- | ------- | --------- |  | ------------ | ------- | - |  | - | ------- | -
|                           |  | June 30,               |         | March 31, |  | December 31,
|                           |  | 2003                   |         | 2003      |  | 2002        
|                           |  |                        |         |           |  |             
|                           |  |                       
|                           |  | (Dollars in thousands)
|Outstanding balance        |  | $                      | 485,471 |           |  | $            | 391,002 |   |  | $ | 312,881 |  
|Outstanding commitments(1) |  | $                      | 763,504 |           |  | $            | 586,192 |   |  | $ | 459,537 |  
|Average spread over prime  |  |                        | 1.97    | %         |  |              | 2.02    | % |  |   | 1.78    | %
|Average FICO score         |  |                        | 712     |           |  |              | 706     |   |  |   | 711     |  
|Average CLTV ratio(2)      |  |                        | 77      | %         |  |              | 78      | % |  |   | 78      | %

Additional Information as of June 30,
2003

|             |       |                        |         |              |  |                |    |         |  |             |      |   |  |  |     |  |  |  |      |   | 
|------------ | ----- | ---------------------- | ------- | ------------ |  | -------------- | -- | ------- |  | ----------- | ---- | - |  |  | --- |  |  |  | ---- | - | 
|             |       | Total                  |         | Average Loan |  |                |    |         |  | 30+ Days   
|             |       | Outstanding            |         | Commitment   |  | Average Spread |    | Average |  | Delinquency
|CLTV         |       | Balance                |         | Balance      |  | Over Prime     |    | FICO    |  | Percentage 
|             |       |                        |         |              |  |                |    |         |  |            
|             |       |                        |         |              |  |                |    |         |  |            
|             |       |                       
|             |       | (Dollars in thousands)
|>96% &< 100% |       | $                      | 14,356  |              |  | $              | 45 |         |  |             | 4.38 | % |  |  | 722 |  |  |  | 0.60 | %
|>91% &< 95%  |       |                        | 73,852  |              |  |                | 50 |         |  |             | 3.44 | % |  |  | 715 |  |  |  | 0.52 | %
|>81% &< 90%  |       |                        | 190,074 |              |  |                | 49 |         |  |             | 2.30 | % |  |  | 695 |  |  |  | 0.56 | %
|>71% &< 80%  |       |                        | 110,736 |              |  |                | 79 |         |  |             | 1.01 | % |  |  | 716 |  |  |  | 0.33 | %
|<70%         |       |                        | 96,453  |              |  |                | 84 |         |  |             | 0.92 | % |  |  | 727 |  |  |  | 0.12 | %
|             |       |                        |         |              |  |                |    |         |  |             |      |   |  |  |     |  |  |  |      |  
|             | Total |                        | $       | 485,471      |  |                |    |         |  |             |      |   |  |  |     |  |  |  |      |   | 
|             |       |                        |         |              |  |                |    |         |  |             |      |   |  |  |     |  |  |  |      |  



---



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

30



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##### Table of Contents






NET INTEREST INCOME

The following table sets forth information
regarding our consolidated average balance sheets (Mortgage
Bank, Investment Portfolio and Consumer Bank 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, 2003          |           | June 30, 2002 |  | March 31, 2003
|                                                         |                                            |                        |           |               |  |               
|                                                         |                                            | Average                |           |               |  | Yield          |        | Average |  |          |      | Yield |   | Average |           |           |  | Yield
|                                                         |                                            | Balance                |           | Interest      |  | Rate           |        | Balance |  | Interest |      | Rate  |   | Balance |           | Interest  |  | Rate 
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |      
|                                                         |                                            |                       
|                                                         |                                            | (Dollars in thousands)
|Securities                                               |                                            | $                      | 1,553,656 |               |  | $              | 16,111 |         |  |          | 4.16 | %     |   | $       | 1,620,863 |           |  | $     | 27,933 |         |  |  | 6.91 | %    |   | $ | 1,920,645 |            |  | $ | 20,961 |         |  |  | 4.43 | %   
|Loans held for sale                                      |                                            |                        | 3,467,140 |               |  |                | 52,460 |         |  |          | 6.07 | %     |   |         | 1,640,629 |           |  |       | 28,373 |         |  |  | 6.94 | %    |   |   | 2,867,547 |            |  |   | 45,201 |         |  |  | 6.39 | %   
|Mortgage loans held for investment                       |                                            |                        | 3,173,541 |               |  |                | 37,201 |         |  |          | 4.70 | %     |   |         | 1,810,660 |           |  |       | 30,795 |         |  |  | 6.82 | %    |   |   | 2,759,900 |            |  |   | 35,962 |         |  |  | 5.28 | %   
|Builder construction and income property                 |                                            |                        | 570,944   |               |  |                | 9,768  |         |  |          | 6.86 | %     |   |         | 555,027   |           |  |       | 10,925 |         |  |  | 7.90 | %    |   |   | 570,886   |            |  |   | 9,720  |         |  |  | 6.91 | %   
|Consumer construction                                    |                                            |                        | 899,204   |               |  |                | 14,639 |         |  |          | 6.53 | %     |   |         | 723,301   |           |  |       | 13,949 |         |  |  | 7.74 | %    |   |   | 839,772   |            |  |   | 14,396 |         |  |  | 6.95 | %   
|Investment in Federal Home Loan Bank stock and
    other |                                            |                        | 244,552   |               |  |                | 2,298  |         |  |          | 3.77 | %     |   |         | 138,650   |           |  |       | 1,585  |         |  |  | 4.59 | %    |   |   | 181,268   |            |  |   | 1,957  |         |  |  | 4.38 | %   
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total interest-earning assets              |                        |           | 9,909,037     |  |                |        | 132,477 |  |          |      | 5.36  | % |         |           | 6,489,130 |  |       |        | 113,560 |  |  |      | 7.02 | % |   |           | 9,140,018  |  |   |        | 128,197 |  |  |      | 5.69 | %
|Other                                                    |                                            |                        | 972,687   |               |  |                |        |         |  |          |      |       |   |         | 699,058   |           |  |       |        |         |  |  |      |      |   |   | 894,643   |            |  |   |        |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total assets                               |                        | $         | 10,881,724    |  |                |        |         |  |          |      |       |   |         | $         | 7,188,188 |  |       |        |         |  |  |      |      |   |   | $         | 10,034,661 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Interest-bearing deposits                                |                                            | $                      | 2,996,427 |               |  |                | 21,950 |         |  |          | 2.94 | %     |   | $       | 2,652,629 |           |  |       | 26,828 |         |  |  | 4.06 | %    |   | $ | 2,736,822 |            |  |   | 21,687 |         |  |  | 3.21 | %   
|Advances from Federal Home Loan Bank                     |                                            |                        | 3,588,032 |               |  |                | 28,308 |         |  |          | 3.16 | %     |   |         | 1,922,567 |           |  |       | 25,004 |         |  |  | 5.22 | %    |   |   | 2,709,008 |            |  |   | 25,558 |         |  |  | 3.83 | %   
|Trust preferred securities                               |                                            |                        | 117,005   |               |  |                | 2,765  |         |  |          | 9.48 | %     |   |         | 116,463   |           |  |       | 2,757  |         |  |  | 9.50 | %    |   |   | 116,866   |            |  |   | 2,763  |         |  |  | 9.59 | %   
|Other borrowings                                         |                                            |                        | 2,159,954 |               |  |                | 11,939 |         |  |          | 2.22 | %     |   |         | 1,089,202 |           |  |       | 9,768  |         |  |  | 3.60 | %    |   |   | 2,695,541 |            |  |   | 15,164 |         |  |  | 2.28 | %   
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total interest-bearing liabilities         |                        |           | 8,861,418     |  |                |        | 64,962  |  |          |      | 2.94  | % |         |           | 5,780,861 |  |       |        | 64,357  |  |  |      | 4.47 | % |   |           | 8,258,237  |  |   |        | 65,172  |  |  |      | 3.20 | %
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Other                                                    |                                            |                        | 1,115,755 |               |  |                |        |         |  |          |      |       |   |         | 526,226   |           |  |       |        |         |  |  |      |      |   |   | 906,201   |            |  |   |        |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total liabilities                          |                        |           | 9,977,173     |  |                |        |         |  |          |      |       |   |         |           | 6,307,087 |  |       |        |         |  |  |      |      |   |   |           | 9,164,438  |  |   |        |         |  |  |      |      |  
|                                                         | Shareholders equity                       |                        |           | 904,551       |  |                |        |         |  |          |      |       |   |         |           | 881,101   |  |       |        |         |  |  |      |      |   |   |           | 870,223    |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|                                                         | Total liabilities and shareholders equity |                        | $         | 10,881,724    |  |                |        |         |  |          |      |       |   |         | $         | 7,188,188 |  |       |        |         |  |  |      |      |   |   | $         | 10,034,661 |  |   |        |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest income                                      |                                            |                        |           |               |  | $              | 67,515 |         |  |          |      |       |   |         |           |           |  | $     | 49,203 |         |  |  |      |      |   |   |           |            |  | $ | 63,025 |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest spread                                      |                                            |                        |           |               |  |                |        |         |  |          | 2.42 | %     |   |         |           |           |  |       |        |         |  |  | 2.55 | %    |   |   |           |            |  |   |        |         |  |  | 2.49 | %   
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     
|Net interest margin                                      |                                            |                        |           |               |  |                |        |         |  |          | 2.73 | %     |   |         |           |           |  |       |        |         |  |  | 3.04 | %    |   |   |           |            |  |   |        |         |  |  | 2.80 | %   
|                                                         |                                            |                        |           |               |  |                |        |         |  |          |      |       |   |         |           |           |  |       |        |         |  |  |      |      |   |   |           |            |  |   |        |         |  |  |      |     

31



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##### Table of Contents



|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |      |  
|-------------------------------------------------------- | ------------------------------------------ | ---------------------- | --------- | ------------- |  | ----- | ------- | ------- |  | -------- | ---- | ----- | - | - | --------- | --------- |  | - | ------- | ------- |  |  | ---- | ---- | -
|                                                         |                                            |                       
|                                                         |                                            | Six Months Ended      
|                                                         |                                            |                       
|                                                         |                                            |                        |           |              
|                                                         |                                            | June 30, 2003          |           | June 30, 2002
|                                                         |                                            |                        |           |              
|                                                         |                                            | Average                |           |               |  | Yield |         | Average |  |          |      | Yield
|                                                         |                                            | Balance                |           | Interest      |  | Rate  |         | Balance |  | Interest |      | Rate 
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |      
|                                                         |                                            |                       
|                                                         |                                            | (Dollars in thousands)
|Securities                                               |                                            | $                      | 1,737,151 |               |  | $     | 37,072  |         |  |          | 4.30 | %     |   | $ | 1,588,444 |           |  | $ | 56,815  |         |  |  | 7.21 | %   
|Loans held for sale                                      |                                            |                        | 3,167,344 |               |  |       | 97,661  |         |  |          | 6.22 | %     |   |   | 1,851,862 |           |  |   | 65,116  |         |  |  | 7.09 | %   
|Mortgage loans held for investment                       |                                            |                        | 2,966,721 |               |  |       | 73,164  |         |  |          | 4.97 | %     |   |   | 1,758,802 |           |  |   | 61,694  |         |  |  | 7.07 | %   
|Builder construction and income property                 |                                            |                        | 570,915   |               |  |       | 19,488  |         |  |          | 6.88 | %     |   |   | 589,842   |           |  |   | 22,324  |         |  |  | 7.63 | %   
|Consumer construction                                    |                                            |                        | 869,488   |               |  |       | 29,035  |         |  |          | 6.73 | %     |   |   | 714,790   |           |  |   | 27,926  |         |  |  | 7.88 | %   
|Investment in Federal Home Loan Bank stock and
    other |                                            |                        | 212,910   |               |  |       | 4,254   |         |  |          | 4.03 | %     |   |   | 138,990   |           |  |   | 3,367   |         |  |  | 4.89 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|                                                         | Total interest-earning assets              |                        |           | 9,524,529     |  |       |         | 260,674 |  |          |      | 5.52  | % |   |           | 6,642,730 |  |   |         | 237,242 |  |  |      | 7.20 | %
|Other                                                    |                                            |                        | 933,665   |               |  |       |         |         |  |          |      |       |   |   | 685,617   |           |  |   |         |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|                                                         | Total assets                               |                        | $         | 10,458,194    |  |       |         |         |  |          |      |       |   |   | $         | 7,328,347 |  |   |         |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|Interest-bearing deposits                                |                                            | $                      | 2,866,625 |               |  |       | 43,638  |         |  |          | 3.07 | %     |   | $ | 2,807,688 |           |  |   | 58,136  |         |  |  | 4.18 | %   
|Advances from Federal Home Loan Bank                     |                                            |                        | 3,148,520 |               |  |       | 53,866  |         |  |          | 3.45 | %     |   |   | 1,939,597 |           |  |   | 49,393  |         |  |  | 5.14 | %   
|Trust preferred securities                               |                                            |                        | 116,936   |               |  |       | 5,528   |         |  |          | 9.53 | %     |   |   | 116,398   |           |  |   | 5,513   |         |  |  | 9.55 | %   
|Other borrowings                                         |                                            |                        | 2,427,748 |               |  |       | 27,102  |         |  |          | 2.25 | %     |   |   | 1,093,624 |           |  |   | 21,243  |         |  |  | 3.92 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|                                                         | Total interest-bearing liabilities         |                        |           | 8,559,829     |  |       |         | 130,134 |  |          |      | 3.07  | % |   |           | 5,957,307 |  |   |         | 134,285 |  |  |      | 4.55 | %
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|Other                                                    |                                            |                        | 1,010,978 |               |  |       |         |         |  |          |      |       |   |   | 498,163   |           |  |   |         |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|                                                         | Total liabilities                          |                        |           | 9,570,807     |  |       |         |         |  |          |      |       |   |   |           | 6,455,470 |  |   |         |         |  |  |      |      |  
|                                                         | Shareholders equity                       |                        |           | 887,387       |  |       |         |         |  |          |      |       |   |   |           | 872,877   |  |   |         |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|                                                         | Total liabilities and shareholders equity |                        | $         | 10,458,194    |  |       |         |         |  |          |      |       |   |   | $         | 7,328,347 |  |   |         |         |  |  |      |      |  
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|Net interest income                                      |                                            |                        |           |               |  | $     | 130,540 |         |  |          |      |       |   |   |           |           |  | $ | 102,957 |         |  |  |      |     
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|Net interest spread                                      |                                            |                        |           |               |  |       |         |         |  |          | 2.45 | %     |   |   |           |           |  |   |         |         |  |  | 2.65 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     
|Net interest margin                                      |                                            |                        |           |               |  |       |         |         |  |          | 2.76 | %     |   |   |           |           |  |   |         |         |  |  | 3.13 | %   
|                                                         |                                            |                        |           |               |  |       |         |         |  |          |      |       |   |   |           |           |  |   |         |         |  |  |      |     

The net interest spread during the second quarter
of 2003 is fairly comparable to that of the first quarter of
2003. However, the yield on interest bearing assets continued to
decline due to high prepayment speeds in the low interest rate
environment and the addition of mortgage loans held for
investment at lower coupon rates. The decline in the yield on
assets was partially offset by the reduction in cost of funds.
However, the yield curve flattened during the quarter resulting
in spread compression. When the yield curve flattens, medium to
long-term interest rates, which influence asset yields, decline
more significantly than shorter term interest rates, which
influence a portion of our liabilities.

32



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##### Table of Contents



The dollar amounts of interest income and
interest expense fluctuate depending upon changes in the average
balances and interest rates of interest-earning assets and
interest-bearing liabilities. The following table details
changes attributable to: (1) changes in volume (changes in
average outstanding balances multiplied by the prior
periods rate), (2) changes in the rate (changes in
the average interest rate multiplied by the prior periods
volume); and, (3) changes in rate/volume (mix)
(changes in rates times the changes in volume).

|                                                         |                        |                                           |        |        |  |     |         |              |   |   |        |         |   |   |         |        | 
|-------------------------------------------------------- | ---------------------- | ----------------------------------------- | ------ | ------ |  | --- | ------- | ------------ | - | - | ------ | ------- | - | - | ------- | ------ | 
|                                                         |                        |                                          
|                                                         |                        | Three Months Ended June 30, 2003 vs. 2002
|                                                         |                        |                                          
|                                                         |                        |                                          
|                                                         |                        | Increase/(Decrease) Due to               
|                                                         |                        |                                          
|                                                         |                        | Volume                                    |        | Rate   |  | Mix |         | Total Change
|                                                         |                        |                                           |        |        |  |     |         |             
|                                                         |                        |                                          
|                                                         |                        | (Dollars in thousands)                   
|Interest income                                          |                        |                                           |        |        |  |     |         |              |   |   |        |         |   |   |         |       
|Mortgage-backed securities                               |                        | $                                         | (1,158 | )      |  | $   | (11,125 | )            |   | $ | 461    |         |   | $ | (11,822 | )     
|Loans held for sale                                      |                        |                                           | 31,586 |        |  |     | (3,549  | )            |   |   | (3,950 | )       |   |   | 24,087  |       
|Mortgage loans held for investment                       |                        |                                           | 23,179 |        |  |     | (9,570  | )            |   |   | (7,203 | )       |   |   | 6,406   |       
|Builder construction and income property                 |                        |                                           | 313    |        |  |     | (1,429  | )            |   |   | (41    | )       |   |   | (1,157  | )     
|Consumer construction                                    |                        |                                           | 3,393  |        |  |     | (2,175  | )            |   |   | (528   | )       |   |   | 690     |       
|Investment in Federal Home Loan Bank stock and
    other |                        |                                           | 1,211  |        |  |     | (282    | )            |   |   | (216   | )       |   |   | 713     |       
|                                                         |                        |                                           |        |        |  |     |         |              |   |   |        |         |   |   |         |       
|                                                         | Total interest income  |                                           |        | 58,524 |  |     |         | (28,130      | ) |   |        | (11,477 | ) |   |         | 18,917 | 
|Interest expense                                         |                        |                                           |        |        |  |     |         |              |   |   |        |         |   |   |         |       
|Interest-bearing deposits                                |                        |                                           | 3,477  |        |  |     | (7,396  | )            |   |   | (959   | )       |   |   | (4,878  | )     
|Advances from Federal Home Loan Bank                     |                        |                                           | 21,660 |        |  |     | (9,835  | )            |   |   | (8,521 | )       |   |   | 3,304   |       
|Trust preferred securities                               |                        |                                           | 12     |        |  |     | (4      | )            |   |   | 0      |         |   |   | 8       |       
|Other borrowings                                         |                        |                                           | 9,603  |        |  |     | (3,748  | )            |   |   | (3,684 | )       |   |   | 2,171   |       
|                                                         |                        |                                           |        |        |  |     |         |              |   |   |        |         |   |   |         |       
|                                                         | Total interest expense |                                           |        | 34,752 |  |     |         | (20,983      | ) |   |        | (13,164 | ) |   |         | 605    | 
|                                                         |                        |                                           |        |        |  |     |         |              |   |   |        |         |   |   |         |       
|                                                         | Net interest income    |                                           | $      | 23,772 |  |     | $       | (7,147       | ) |   | $      | 1,687   |   |   | $       | 18,312 | 
|                                                         |                        |                                           |        |        |  |     |         |              |   |   |        |         |   |   |         |       

|                                                         |                        |                                         |        |         |  |     |         |              |   |   |         |         |   |   |         |        |  
|-------------------------------------------------------- | ---------------------- | --------------------------------------- | ------ | ------- |  | --- | ------- | ------------ | - | - | ------- | ------- | - | - | ------- | ------ | -
|                                                         |                        |                                        
|                                                         |                        | Six Months Ended June 30, 2003 vs. 2002
|                                                         |                        |                                        
|                                                         |                        |                                        
|                                                         |                        | Increase/(Decrease) Due to             
|                                                         |                        |                                        
|                                                         |                        | Volume                                  |        | Rate    |  | Mix |         | Total Change
|                                                         |                        |                                         |        |         |  |     |         |             
|                                                         |                        |                                        
|                                                         |                        | (Dollars in thousands)                 
|Interest income                                          |                        |                                         |        |         |  |     |         |              |   |   |         |         |   |   |         |       
|Mortgage-backed securities                               |                        | $                                       | 5,319  |         |  | $   | (22,917 | )            |   | $ | (2,145  | )       |   | $ | (19,743 | )     
|Loans held for sale                                      |                        |                                         | 46,255 |         |  |     | (8,016  | )            |   |   | (5,694  | )       |   |   | 32,545  |       
|Mortgage loans held for investment                       |                        |                                         | 42,372 |         |  |     | (18,320 | )            |   |   | (12,582 | )       |   |   | 11,470  |       
|Builder construction and income property                 |                        |                                         | (394   | )       |  |     | (2,486  | )            |   |   | 44      |         |   |   | (2,836  | )     
|Consumer construction                                    |                        |                                         | 5,639  |         |  |     | (3,769  | )            |   |   | (761    | )       |   |   | 1,109   |       
|Investment in Federal Home Loan Bank stock and
    other |                        |                                         | 1,791  |         |  |     | (590    | )            |   |   | (314    | )       |   |   | 887     |       
|                                                         |                        |                                         |        |         |  |     |         |              |   |   |         |         |   |   |         |       
|                                                         | Total interest income  |                                         |        | 100,982 |  |     |         | (56,098      | ) |   |         | (21,452 | ) |   |         | 23,432 |  
|Interest expense                                         |                        |                                         |        |         |  |     |         |              |   |   |         |         |   |   |         |       
|Interest-bearing deposits                                |                        |                                         | 1,220  |         |  |     | (15,395 | )            |   |   | (323    | )       |   |   | (14,498 | )     
|Advances from Federal Home Loan Bank                     |                        |                                         | 30,786 |         |  |     | (16,210 | )            |   |   | (10,103 | )       |   |   | 4,473   |       
|Trust preferred securities                               |                        |                                         | 25     |         |  |     | (10     | )            |   |   | 0       |         |   |   | 15      |       
|Other borrowings                                         |                        |                                         | 25,914 |         |  |     | (9,035  | )            |   |   | (11,020 | )       |   |   | 5,859   |       
|                                                         |                        |                                         |        |         |  |     |         |              |   |   |         |         |   |   |         |       
|                                                         | Total interest expense |                                         |        | 57,945  |  |     |         | (40,650      | ) |   |         | (21,446 | ) |   |         | (4,151 | )
|                                                         |                        |                                         |        |         |  |     |         |              |   |   |         |         |   |   |         |       
|                                                         | Net interest income    |                                         | $      | 43,037  |  |     | $       | (15,448      | ) |   | $       | (6      | ) |   | $       | 27,583 |  
|                                                         |                        |                                         |        |         |  |     |         |              |   |   |         |         |   |   |         |       

33



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##### Table of Contents






OVERALL INTEREST RATE RISK
MANAGEMENT

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

The following table sets forth the NPV and change
in NPV of the Bank that we estimate might result from a 100
basis point change in interest rates as of June 30, 2003
and December 31, 2002. IndyMacs NPV model has been
built to focus on the Bank alone as the $91.6 million of
assets at the Parent Company have relatively little interest
rate risk exposure.

|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |           |  |   |           |           |  |   |           |           | 
|-------------------------------------------- | ----------------- | ---------------------- | --------- | ------------------- |  | -------- | --------- | ------------------- |  | -------- | --------- | ---------- |  | - | --------- | --------- |  | - | --------- | --------- |  | - | --------- | --------- | 
|                                             |                   |                        |           |                    
|                                             |                   | June 30, 2003          |           | December 31, 2002  
|                                             |                   |                        |           |                    
|                                             |                   |                        |           |                     |  |          |           |                    
|                                             |                   |                        |           | 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                    |                   | $                      | 408,490   |                     |  | $        | 408,490   |                     |  | $        | 408,490   |            |  | $ | 196,589   |           |  | $ | 196,589   |           |  | $ | 196,589   |          
|Mortgage-backed and U.S. Treasury securities |                   |                        | 1,400,804 |                     |  |          | 1,394,026 |                     |  |          | 1,398,395 |            |  |   | 2,292,250 |           |  |   | 2,301,966 |           |  |   | 2,270,640 |          
|Loans receivable                             |                   |                        | 7,709,574 |                     |  |          | 7,815,664 |                     |  |          | 7,571,969 |            |  |   | 6,132,127 |           |  |   | 6,226,597 |           |  |   | 6,014,990 |          
|MSRs                                         |                   |                        | 335,727   |                     |  |          | 252,423   |                     |  |          | 429,138   |            |  |   | 299,215   |           |  |   | 226,834   |           |  |   | 365,046   |          
|Other assets                                 |                   |                        | 684,385   |                     |  |          | 694,773   |                     |  |          | 673,800   |            |  |   | 466,370   |           |  |   | 473,382   |           |  |   | 459,294   |          
|Derivatives                                  |                   |                        | 30,646    |                     |  |          | 8,911     |                     |  |          | 65,566    |            |  |   | 72,445    |           |  |   | 67,868    |           |  |   | 104,189   |          
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |           |  |   |           |           |  |   |           |          
|                                             | Total assets      |                        | $         | 10,569,626          |  |          | $         | 10,574,287          |  |          | $         | 10,547,358 |  |   | $         | 9,458,996 |  |   | $         | 9,493,236 |  |   | $         | 9,410,748 | 
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |           |  |   |           |           |  |   |           |          
|Deposits                                     |                   | $                      | 3,906,225 |                     |  | $        | 3,957,196 |                     |  | $        | 3,858,150 |            |  | $ | 3,177,911 |           |  | $ | 3,217,410 |           |  | $ | 3,139,628 |          
|Advances from Federal Home Loan Bank         |                   |                        | 3,511,226 |                     |  |          | 3,541,797 |                     |  |          | 3,480,257 |            |  |   | 2,786,237 |           |  |   | 2,820,402 |           |  |   | 2,753,314 |          
|Other borrowings                             |                   |                        | 1,802,862 |                     |  |          | 1,804,171 |                     |  |          | 1,801,360 |            |  |   | 2,493,168 |           |  |   | 2,495,465 |           |  |   | 2,490,801 |          
|Other liabilities                            |                   |                        | 310,654   |                     |  |          | 310,833   |                     |  |          | 310,420   |            |  |   | 140,853   |           |  |   | 140,897   |           |  |   | 140,741   |          
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |           |  |   |           |           |  |   |           |          
|                                             | Total liabilities |                        |           | 9,530,967           |  |          |           | 9,613,997           |  |          |           | 9,450,187  |  |   |           | 8,598,169 |  |   |           | 8,674,174 |  |   |           | 8,524,484 | 
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |           |  |   |           |           |  |   |           |          
|Shareholders equity (NPV)                   |                   | $                      | 1,038,659 |                     |  | $        | 960,290   |                     |  | $        | 1,097,171 |            |  | $ | 860,827   |           |  | $ | 819,062   |           |  | $ | 886,264   |          
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |           |  |   |           |           |  |   |           |          
|% Change from base case                      |                   |                        |           |                     |  |          | (7.55     | )%                  |  |          | 5.63      | %          |  |   |           |           |  |   | (4.85     | )%        |  |   | 2.95      | %        
|                                             |                   |                        |           |                     |  |          |           |                     |  |          |           |            |  |   |           |           |  |   |           |           |  |   |           |          

The increase in the fair value of equity from
December 31, 2002 to June 30, 2003 is primarily due to
retained earnings, growth in the pipeline of mortgage loans in
process and a deposit mix more heavily weighted towards
transaction accounts. The June 30, 2003 analysis indicates
that the Bank is more asset sensitive and better positioned for
rising rates in an up 100 basis points scenario. It should be
noted that this analysis does not reflect changes in volumes and
profits from our mortgage banking operations that would be
expected to result from the interest rate environment.

The assumptions inherent in our interest rate
models include expected valuation changes in an instantaneous
and parallel interest rate shock and assumptions as to the
degree of correlation between our hedge positions and the hedged
assets and liabilities. These assumptions may not accurately
predict factors such as the spread-widening or spread-tightening
risk 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. These factors include, but are not limited to
expected increases in income associated with the expected
increase in production volume that could result from a decrease
in interest rates and changes in the asset, liability and
derivative mix during interest rate changes. Consequently, the
preceding simulation should not be viewed as a forecast, as it
is reasonable to expect that actual results will vary
significantly from the analyses discussed above.

34



---



##### Table of Contents



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




CREDIT RISK AND RESERVES






GENERAL


The following table summarizes the Companys
allowance for loan losses/ credit discounts and non-performing
assets as of June 30, 2003.

|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |             |      |   |        |        |        |   |       |       |       |   |       |       |        | 
|--------------------------------------------------------------- | ------------------------------------ | ----------------------------------- | --------- | ------------- | --------- | --------------- | ------ | -------------- | ------ | ----------- | ------ | ----------- | ---- | - | ------ | ------ | ------ | - | ----- | ----- | ----- | - | ----- | ----- | ------ | 
|                                                                |                                      |                                     |           | Allowance     |           |                 |        |                |        | QTD Net     |        | YTD Net    
|                                                                |                                      |                                     |           | for Loan      |           | Total Reserves  |        |                |        | Charge      |        | Charge     
|                                                                |                                      |                                     |           | Losses/Credit |           | as a Percentage |        | Non-Performing |        | Offs/Net    |        | Offs/Net   
|Type of Loan                                                    |                                      | Book Value                          |           | Discounts     |           | of Book Value   |        | Assets         |        | REO (Gains) |        | REO (Gains)
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |            
|                                                                |                                      |                                    
|                                                                |                                      | (Dollars in thousands)             
|Held for investment portfolio                                   |                                      |                                     |           |               |           |                 |        |                |        |             |        |             |      |   |        |        |        |   |       |       |       |   |       |      
|SFR mortgage loans and HELOCs                                   |                                      | $                                   | 2,866,833 |               |           | $               | 16,432 |                |        |             | 0.57   | %           |      | $ | 11,059 |        |        | $ | 691   |       |       | $ | 1,857 |      
|Land and other mortgage                                         |                                      |                                     | 94,165    |               |           |                 | 3,178  |                |        |             | 3.37   | %           |      |   | 2,214  |        |        |   |      |       |       |   |      |      
|Builder construction and income property                        |                                      |                                     | 556,163   |               |           |                 | 12,332 |                |        |             | 2.22   | %           |      |   | 1,605  |        |        |   | 3,066 |       |       |   | 3,066 |      
|Consumer construction                                           |                                      |                                     | 988,020   |               |           |                 | 10,404 |                |        |             | 1.05   | %           |      |   | 10,654 |        |        |   | 421   |       |       |   | 570   |      
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |             |      |   |        |        |        |   |       |       |       |   |       |      
|                                                                | Total core held for investment loans |                                     |           | 4,505,181     |           |                 |        | 42,346         |        |             |        | 0.94        | %    |   |        | 25,532 |        |   |       | 4,178 |       |   |       | 5,493 |       
|                                                                | Discontinued product
    lines(1)    |                                     |           | 84,031        |           |                 |        | 7,696          |        |             |        | 9.16        | %    |   |        | 7,126  |        |   |       | 2,926 |       |   |       | 5,226 |       
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |             |      |   |        |        |        |   |       |       |       |   |       |      
|                                                                |                                      | Total held for investment portfolio |           |               | 4,589,212 |                 |        |                | 50,042 |             |        |             | 1.09 | % |        |        | 32,658 |   |       |       | 7,104 |   |       |       | 10,719 | 
|Held for sale portfolio                                         |                                      |                                     | 3,155,163 |               |           |                 | 11,076 |                |        |             | 0.35   | %           |      |   | 30,054 |        |        |   |      |       |       |   |      |      
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |             |      |   |        |        |        |   |       |       |       |   |       |      
|                                                                |                                      | Total loans                         |           | $             | 7,744,375 |                 |        | $              | 61,118 |             |        |             | 0.79 | % |        |        | 62,712 |   |       | $     | 7,104 |   |       | $     | 10,719 | 
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |             |      |   |        |        |        |   |       |       |       |   |       |      
|Foreclosed assets                                               |                                      |                                     |           |               |           |                 |        |                |        |             |        |             |      |   |        |        |        |   |       |       |       |   |       |      
|Core portfolios                                                 |                                      |                                     | 29,587    |               |           | $               | (922   | )              |        | $           | (1,225 | )          
|Discontinued product lines                                      |                                      |                                     | 1,441     |               |           |                 | 133    |                |        |             | (136   | )          
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |            
|Total foreclosed assets                                         |                                      |                                     | 31,028    |               |           | $               | (789   | )              |        | $           | (1,361 | )          
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |            
|Total non-performing assets                                     |                                      | $                                   | 93,740    |               |           |                 |        |                |        |             |        |            
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |            
|Total non-performing assets as a percentage of
    total assets |                                      |                                     | 0.88      | %             |           |                 |        |                |        |             |        |            
|                                                                |                                      |                                     |           |               |           |                 |        |                |        |             |        |            



---



|    |                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------
|(1) | Discontinued product lines include manufactured
    home loans, home improvement loans and warehouse lines of credit.

35



---



##### Table of Contents



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

|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |        |        |         | 
|------------------------------------------------------------------------- | -------------------------- | ----------------------------- | ------------------------------------ | -------- | ------ | ------------ | ------ | ------ | ------ | ------ | ------ | ------ | ------ | ------- | 
|                                                                          |                            | June 30,                      |                                      | June 30, |        | December 31,
|                                                                          |                            | 2003                          |                                      | 2002     |        | 2002        
|                                                                          |                            |                               |                                      |          |        |             
|                                                                          |                            |                              
|                                                                          |                            | (Dollars in thousands)       
|Loans held for investment                                                 |                            |                               |                                      |          |        |              |        |        |        |        |        |       
|                                                                          | Portfolio loans            |                               |                                      |          |        |              |        |        |        |        |        |        |       
|                                                                          |                            | SFR mortgage loans            |                                      | $        | 11,059 |              |        | $      | 21,512 |        |        | $      | 15,097 |        
|                                                                          |                            | Land and other mortgage loans |                                      |          | 2,214  |              |        |        | 9,581  |        |        |        | 8,376  |        
|                                                                          |                            | Builder construction          |                                      |          | 1,605  |              |        |        | 13,363 |        |        |        | 9,275  |        
|                                                                          |                            | Consumer construction         |                                      |          | 10,654 |              |        |        | 9,426  |        |        |        | 10,257 |        
|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |       
|                                                                          |                            |                               | Total portfolio non-performing loans |          |        | 25,532       |        |        |        | 53,882 |        |        |        | 43,005  | 
|                                                                          | Discontinued product lines |                               |                                      | 7,126    |        |              |        | 11,669 |        |        |        | 10,005 |       
|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |       
|Total non-performing loans held for investment                            |                            |                               | 32,658                               |          |        |              | 65,551 |        |        |        | 53,010 |       
|Non-performing loans held for sale                                        |                            |                               | 30,054                               |          |        |              | 10,889 |        |        |        | 10,626 |       
|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |       
|                                                                          |                            |                               | Total non-performing loans           |          |        | 62,712       |        |        |        | 76,440 |        |        |        | 63,636  | 
|Foreclosed assets                                                         |                            |                               | 31,028                               |          |        |              | 21,569 |        |        |        | 36,526 |       
|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |       
|                                                                          |                            |                               | Total non-performing assets          |          | $      | 93,740       |        |        | $      | 98,009 |        |        | $      | 100,162 | 
|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |       
|Total non-performing assets to total assets                               |                            |                               | 0.88                                 | %        |        |              | 1.32   | %      |        |        | 1.05   | %     
|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |       
|Allowance for loan losses to non-performing loans
    held for investment |                            |                               | 153                                  | %        |        |              | 81     | %      |        |        | 96     | %     
|                                                                          |                            |                               |                                      |          |        |              |        |        |        |        |        |       

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,
|                                        |                                      | 2003                            |        | 2002             |        | 2003     |        | 2002    
|                                        |                                      |                                 |        |                  |        |          |        |         
|                                        |                                      |                                
|                                        |                                      | (Dollars in thousands)         
|Core portfolio loans                    |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|Balance, beginning of period            |                                      | $                               | 41,524 |                  |        | $        | 42,202 |          |        | $ | 41,314 |        |        | $ | 41,771 |       
|Provision for loan losses               |                                      |                                 | 5,000  |                  |        |          | 2,127  |          |        |   | 6,525  |        |        |   | 4,303  |       
|Charge-offs net of recoveries           |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|                                        |                                      | SFR mortgage loans              |        |                  | (691   | )        |        |          | (971   | ) |        |        | (1,857 | ) |        |        | (1,743 | )
|                                        |                                      | Land and other mortgage loans   |        |                  |       |          |        |          |       |   |        |        |       |   |        |        |       |  
|                                        |                                      | Builder construction            |        |                  | (3,066 | )        |        |          |       |   |        |        | (3,066 | ) |        |        | (973   | )
|                                        |                                      | Consumer construction           |        |                  | (421   | )        |        |          | (102   | ) |        |        | (570   | ) |        |        | (102   | )
|                                        |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|                                        | Charge-offs net of recoveries        |                                 |        | (4,178           | )      |          |        | (1,073   | )      |   |        | (5,493 | )      |   |        | (2,818 | )     
|                                        | Transfers to held for sale portfolio |                                 |        |                 |        |          |        | (3,158   | )      |   |        |       |        |   |        | (3,158 | )     
|                                        |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|Balance, end of period                  |                                      |                                 | 42,346 |                  |        |          | 40,098 |          |        |   | 42,346 |        |        |   | 40,098 |       
|Discontinued product lines              |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|Balance, beginning of period            |                                      |                                 | 8,722  |                  |        |          | 14,700 |          |        |   | 9,447  |        |        |   | 15,929 |       
|Provision for loan losses               |                                      |                                 | 1,900  |                  |        |          | 1,441  |          |        |   | 3,475  |        |        |   | 3,451  |       
|                                        | Charge-offs net of recoveries        |                                 |        | (2,926           | )      |          |        | (3,261   | )      |   |        | (5,226 | )      |   |        | (6,500 | )     
|                                        |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|Balance, end of period                  |                                      |                                 | 7,696  |                  |        |          | 12,880 |          |        |   | 7,696  |        |        |   | 12,880 |       
|                                        |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|                                        |                                      | Total allowance for loan losses |        | $                | 50,042 |          |        | $        | 52,978 |   |        | $      | 50,042 |   |        | $      | 52,978 |  
|                                        |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|Net charge-offs to average loans        |                                      |                                 | 0.11   | %                |        |          | 0.13   | %        |        |   | 0.18   | %      |        |   | 0.26   | %     
|Net charge-offs to quarterly production |                                      |                                 | 0.09   | %                |        |          | 0.06   | %        |        |   | 0.07   | %      |        |   | 0.08   | %     
|Core portfolio loans only:              |                                      |                                 |        |                  |        |          |        |          |        |   |        |        |        |   |        |       
|Net charge-offs to average loans        |                                      |                                 | 0.07   | %                |        |          | 0.03   | %        |        |   | 0.09   | %      |        |   | 0.08   | %     
|Net charge-offs to quarterly production |                                      |                                 | 0.05   | %                |        |          | 0.02   | %        |        |   | 0.04   | %      |        |   | 0.03   | %     

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Total credit-related reserves, including the
allowance for loan losses and the lower of cost or market
valuations, amounted to $61.1 million at June 30,
2003, compared to $57.7 million at December 31, 2002.
The allowance for loan losses of $50.0 million for loans
held for investment at June 30, 2003 represented 1.09% of
total loans held for investment. This compares to an allowance
for loan losses of $50.7 million, or 1.28% of total loans
held for investment, at December 31, 2002. Net charge-offs
decreased from 0.12% of average loans during the fourth quarter
of 2002 to 0.07% of average loans during the second quarter of
2003.

Our overall asset quality improved from
non-performing assets to total assets of 1.05% at
December 31, 2002 to 0.88% at June 30, 2003. Total
non-performing assets decreased by $6.5 million, from
$100.2 million at December 31, 2002 to
$93.7 million at June 30, 2003. Non-performing loans
in our held for investment portfolio decreased
$20.4 million compared to December 31, 2002. The
improvement was due to liquidation of non-performing loans and
transfers to foreclosed assets. Overall foreclosed assets
decreased $5.5 million during the first half of 2003 primarily
due to sales of these assets. These decreases were partially
offset by the increase in non-performing loans held for sale of
$19.4 million from $10.6 million at December 31,
2002. The increase in non-performing loans held for sale is a
result of the loans acquired through clean up calls exercised
during the second quarter 2003. The clean up call non-performing
loans amounted to $16.7 million at June 30, 2003,
which accounted for 55% of the total non-performing loans held
for sale.

As master servicer for our various
securitizations, we retain the right to call the securities when
the outstanding loan balance in the securitization trust
declines to a specified level, typically 10%, of the original
balance. When the fair value of loans remaining within a
securitization exceeds the expected losses on nonperforming
loans and the cost of exercise, we will typically exercise our
option to call. We called a total of $272.6 million loans
during the second quarter of 2003. A portion of the loans we
acquired pursuant to clean-up calls was delinquent or
non-performing. At June 30, 2003, non-performing assets
acquired through clean-up calls amounted to $19.4 million, which
are primarily classified as loans held for sale at June 30,
2003. We anticipate that approximately $500 million in
loans will be eligible for clean-up calls during the remainder
of 2003. Therefore, it is possible that the absolute levels of
non-performing loans held by us may increase temporarily between
the time of the call exercise and the disposition of these loans.

With respect to the portfolio of loans held for
investment in IndyMacs core businesses, the allowance for
loan losses at June 30, 2003 was $42.3 million or 0.94% of
loan balance, compared to 1.50% of total loan balance at
June 30, 2002. The overall asset quality improved due to
decreases in non-performing loans held-for-investment and
disposition of foreclosed assets. Non-performing loans decreased
by $28.4 million from $53.9 million at June 30,
2002 to $25.5 million at June 30, 2003. Charge-offs in
our core loans held for investment portfolio in the second
quarter of 2003 included a $3.1 million charge-off on one
large builder construction loan, forecasted in prior
disclosures. Charge-offs in the second half of 2003 are expected
to approximate the charge-offs for the six months ended
June 30, 2003.

With respect to IndyMacs non-core
liquidating portfolios, consisting primarily of manufactured
housing and home improvement loans, net charge-offs totaled
$2.9 million during the second quarter of 2003, down from
the $3.3 million of charge-offs on these portfolios during the
second quarter of 2002. After provision for loan losses of
$1.9 million, the allowance for loan losses was $7.7
million, or 9.2% of the remaining principal balance of such
liquidating portfolios, compared to the 11.8% reserve coverage
at June 30, 2002.

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 primarily
of manufactured housing loans and home improvement loans.

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

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loan losses be increased based on their
evaluation of the information available to them at the time of
their 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
lower of cost or market valuation for these loans. The lower of
cost or market on loans held for sale totaled $11.1 million
at June 30, 2003. The increase in non-performing loans held
for sale was largely due to the delinquent loans acquired as
part of the clean-up calls exercised by the Company during the
second quarter 2003. Therefore, the increase in non-performing
loans is not related to our core lending portfolios and is
expected to be temporary until the disposition of these loans.




SECONDARY MARKET RESERVES

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
are not in conformity with the representations and warranties we
make at the time of sale. We have made significant investments
in our pre-production and post-production quality control
processes to identify potential systemic issues that could cause
repurchases. We believe that these efforts have improved our
production quality; however, 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  |                       | $ | 74.1       |      |             | $ | 45,284 |        |  |  | 0.16 | %   
|            | Securitization trusts |                       |   | 7.7        |      |             |   | 41,422 |        |  |  | 0.02 | %   
|            |                       |                       |   |            |      |             |   |        |        |  |  |     
|            |                       | Total                 |   | $          | 81.8 |             |   | $      | 86,706 |  |  |      | 0.09 | %
|            |                       |                       |   |            |      |             |   |        |        |  |  |     

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 $30.1 million
at June 30, 2003, 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, 2003.

|                                                                                    |  |                        |         |        |  |   |         |  
|----------------------------------------------------------------------------------- |  | ---------------------- | ------- | ------ |  | - | ------- | -
|                                                                                    |  | Three                  |         | Six   
|                                                                                    |  | Months                 |         | Months
|                                                                                    |  |                        |         |       
|                                                                                    |  |                       
|                                                                                    |  | (Dollars in thousands)
|Balance, beginning of period                                                        |  | $                      | 34,171  |        |  | $ | 37,636  |  
|Additions/provisions                                                                |  |                        | 7,767   |        |  |   | 11,811  |  
|Claims reimbursement and estimated discounts on
    loans held for sale/charge-offs |  |                        | (11,838 | )      |  |   | (19,347 | )
|                                                                                    |  |                        |         |        |  |   |         |  
|Balance, June 30, 2003                                                              |  | $                      | 30,100  |        |  | $ | 30,100  |  
|                                                                                    |  |                        |         |        |  |   |         |  

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.
The Company will continue to evaluate the adequacy of our
reserves and may

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continue to allocate a portion of its 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,
|                                         |  | 2003                   |         | 2002             |  | 2003      |        | 2003     |  | 2002    
|                                         |  |                        |         |                  |  |           |        |          |  |         
|                                         |  |                       
|                                         |  | (Dollars in thousands)
|Salaries and related                     |  | $                      | 57,030  |                  |  | $         | 47,188 |          |  | $        | 53,094 |  |  | $ | 110,125 |  |  | $ | 96,723  | 
|Premises and equipment                   |  |                        | 8,138   |                  |  |           | 7,741  |          |  |          | 8,306  |  |  |   | 16,444  |  |  |   | 14,594  | 
|Loan purchase costs                      |  |                        | 7,810   |                  |  |           | 4,668  |          |  |          | 7,058  |  |  |   | 14,868  |  |  |   | 8,516   | 
|Professional services                    |  |                        | 5,086   |                  |  |           | 5,017  |          |  |          | 4,610  |  |  |   | 9,696   |  |  |   | 9,811   | 
|Data processing                          |  |                        | 8,131   |                  |  |           | 4,803  |          |  |          | 6,764  |  |  |   | 14,895  |  |  |   | 9,365   | 
|Office                                   |  |                        | 5,860   |                  |  |           | 4,248  |          |  |          | 5,260  |  |  |   | 11,120  |  |  |   | 8,181   | 
|Advertising and promotion                |  |                        | 6,580   |                  |  |           | 2,772  |          |  |          | 6,064  |  |  |   | 12,644  |  |  |   | 5,382   | 
|Operations and sale of foreclosed assets |  |                        | 794     |                  |  |           | 968    |          |  |          | 956    |  |  |   | 1,750   |  |  |   | 977     | 
|Other                                    |  |                        | 5,329   |                  |  |           | 3,297  |          |  |          | 3,546  |  |  |   | 8,874   |  |  |   | 6,707   | 
|                                         |  |                        |         |                  |  |           |        |          |  |          |        |  |  |   |         |  |  |   |         | 
|                                         |  | $                      | 104,758 |                  |  | $         | 80,702 |          |  | $        | 95,658 |  |  | $ | 200,416 |  |  | $ | 160,256 | 
|                                         |  |                        |         |                  |  |           |        |          |  |          |        |  |  |   |         |  |  |   |         | 

General and administrative expenses, including
salaries, increased during the three months ended June 30,
2003 to $104.8 million, compared to $80.7 million during
the same period in 2002, as the Company has continued to build
new product lines and channels and infrastructure and to open
new locations to support its projected continued growth in its
operations. This is evident in the 41.7% increase in the
Companys average full-time equivalent employees from 2,473
for the three months ended June 30, 2002 to 3,505 for the
three months ended June 30, 2003. The Company has also made
investments 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; (3) expand its
sales force infrastructure with dedicated resources focused on
new customer activation, customer training and support, and
improve its conversion of loan submissions to fundings; and,
(4) enhance its customer service response performance.




DIVIDEND POLICY

Based on IndyMacs strong operating
performance and strong financial position, including earnings,
capital and liquidity and its commitment to shareholder value,
IndyMacs Board of Directors declared a cash dividend of
$0.15 per share, up 50%, from $0.10 per share in the previous
quarter. The cash dividend is payable September 18, 2003 to
shareholders of record on August 14, 2003. This increased
dividend now represents a payout ratio of 21%, up from a payout
ratio of 14% previously.




FUTURE OUTLOOK

On average, U.S. mortgage debt outstanding
has grown approximately 7% to 8% per year over the last twenty
years and is projected, based on economic demographics, to
continue this level of growth over the next decade. At this
rate, mortgage debt outstanding roughly doubles every decade.
Since the inception of its operating business plan 10 years
ago in January 1993 IndyMac has grown earnings at a compounded
annual growth rate of 39% and EPS at a compounded annual growth
rate of 28%. We believe, as a result of our business model,
employees, current market share, capital strength and historic
performance, that we can achieve growth at approximately two
times the industry rate, or approximately 15% over the
intermediate term. Our results are nonetheless subject to a
variety of factors that are not within our control, including
those

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referred to under Forward-Looking
Statements, elsewhere in this report and in our annual,
quarterly and other reports filed with the Securities and
Exchange Commission.


For 2003, the Company expects that earnings per
share will grow 12% to 16% compared to 2002. However, the
mortgage banking industry is cyclical in nature and can
fluctuate materially on a near term basis. The environment of
historically low interest rates over the past two years has been
very favorable for mortgage bankers such as IndyMac. It is
possible that as the industry transitions to a higher interest
rate environment, the Company could see lower levels of growth,
or even a reduction in earnings per share, given the volatility
of the industry. The Company expects, however, that its annual
growth rate will normalize at around 15% over the intermediate
term.




LIQUIDITY AND CAPITAL RESOURCES




OVERVIEW

At June 30, 2003, we had operating liquidity
of $1.3 billion, which is represented by unpledged liquid
assets on hand plus amounts that may be immediately raised
through the pledging of other available assets as collateral
pursuant to committed financing facilities. We currently believe
that our liquidity level is in excess of that necessary to
satisfy our operating requirements and meet our obligations and
commitments in a timely and cost effective manner.




PRINCIPAL SOURCES OF CASH

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

Loan Sales and
Securitizations

Our business model relies heavily upon selling
the majority of our mortgage loans shortly after acquisition.
The proceeds of these sales are a critical component of the
liquidity necessary for our ongoing operations. During the three
months ended June 30, 2003, we sold our loans through three
channels: (1) GSEs; (2) private label securitizations;
and, (3) whole loan sales. If any of our sales channels
were disrupted, our liquidity could be negatively impacted.
Disruptions in our whole loan sales and mortgage securitization
transactions can occur as a result of the performance of our
existing securitizations, as well as economic events or other
factors beyond our control.

Deposits/ Retail Bank

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

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

40



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

|                             |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |     |  
|---------------------------- | ------------------- | ---------------------- | --------- | ------------- |  | ----------------- | -- | -------- | - | ------ | --------- | --------- |  |  | -- | --- | - | - | --------- | --------- |  |  | -- | --- | -
|                             |                     |                        |           |               |  |                  
|                             |                     | June 30, 2003          |           | June 30, 2002 |  | December 31, 2002
|                             |                     |                        |           |               |  |                  
|                             |                     |                        |           | % of          |  |                   |    | % of     |   |        |           | % of     
|                             |                     |                        |           | Total         |  |                   |    | Total    |   |        |           | Total    
|                             |                     | Amount                 |           | Deposits      |  | Amount            |    | Deposits |   | Amount |           | Deposits 
|                             |                     |                        |           |               |  |                   |    |          |   |        |           |          
|                             |                     |                       
|                             |                     | (Dollars in thousands)
|Noninterest-bearing checking |                     | $                      | 40,483    |               |  |                   | 1  | %        |   | $      | 34,444    |           |  |  | 1  | %   |   | $ | 38,430    |           |  |  | 1  | %  
|Interest-bearing checking    |                     |                        | 37,256    |               |  |                   | 1  | %        |   |        | 36,212    |           |  |  | 1  | %   |   |   | 37,867    |           |  |  | 1  | %  
|Savings                      |                     |                        | 1,225,707 |               |  |                   | 32 | %        |   |        | 497,908   |           |  |  | 18 | %   |   |   | 635,608   |           |  |  | 21 | %  
|Custodial accounts           |                     |                        | 716,578   |               |  |                   | 18 | %        |   |        | 252,873   |           |  |  | 9  | %   |   |   | 497,462   |           |  |  | 16 | %  
|                             |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|                             | Total core deposits |                        |           | 2,020,024     |  |                   |    | 52       | % |        |           | 821,437   |  |  |    | 29  | % |   |           | 1,209,367 |  |  |    | 39  | %
|Certificates of deposit      |                     |                        | 1,883,461 |               |  |                   | 48 | %        |   |        | 1,984,698 |           |  |  | 71 | %   |   |   | 1,931,135 |           |  |  | 61 | %  
|                             |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|                             | Total deposits      |                        | $         | 3,903,485     |  |                   |    | 100      | % |        | $         | 2,806,135 |  |  |    | 100 | % |   | $         | 3,140,502 |  |  |    | 100 | %
|                             |                     |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    

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

|            |                |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |     |  
|----------- | -------------- | ---------------------- | --------- | ------------- |  | ----------------- | -- | -------- | - | ------ | --------- | --------- |  |  | -- | --- | - | - | --------- | --------- |  |  | -- | --- | -
|            |                |                        |           |               |  |                  
|            |                | June 30, 2003          |           | June 30, 2002 |  | December 31, 2002
|            |                |                        |           |               |  |                  
|            |                |                        |           | % of          |  |                   |    | % of     |   |        |           | % of     
|            |                |                        |           | Total         |  |                   |    | Total    |   |        |           | Total    
|            |                | Amount                 |           | Deposits      |  | Amount            |    | Deposits |   | Amount |           | Deposits 
|            |                |                        |           |               |  |                   |    |          |   |        |           |          
|            |                |                       
|            |                | (Dollars in thousands)
|Branch      |                | $                      | 1,526,351 |               |  |                   | 39 | %        |   | $      | 1,223,829 |           |  |  | 44 | %   |   | $ | 1,297,668 |           |  |  | 41 | %  
|Telebanking |                |                        | 488,575   |               |  |                   | 13 | %        |   |        | 567,624   |           |  |  | 20 | %   |   |   | 489,977   |           |  |  | 16 | %  
|Internet    |                |                        | 476,645   |               |  |                   | 12 | %        |   |        | 344,084   |           |  |  | 12 | %   |   |   | 338,830   |           |  |  | 11 | %  
|Money desk  |                |                        | 695,336   |               |  |                   | 18 | %        |   |        | 417,725   |           |  |  | 15 | %   |   |   | 516,565   |           |  |  | 16 | %  
|Custodial   |                |                        | 716,578   |               |  |                   | 18 | %        |   |        | 252,873   |           |  |  | 9  | %   |   |   | 497,462   |           |  |  | 16 | %  
|            |                |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    
|            | Total deposits |                        | $         | 3,903,485     |  |                   |    | 100      | % |        | $         | 2,806,135 |  |  |    | 100 | % |   | $         | 3,140,502 |  |  |    | 100 | %
|            |                |                        |           |               |  |                   |    |          |   |        |           |           |  |  |    |     |   |   |           |           |  |  |    |    

Included in deposits at June 30, 2003 and
December 31, 2002 were non-interest bearing custodial
accounts, primarily related to our GSE servicing portfolio,
totaling $716.6 million and $497.5 million,
respectively.

Advances from Federal Home Loan
Bank

The Federal Home Loan Bank system functions as a
borrowing source for regulated financial depositories and
similar institutions that are engaged in residential housing
finance. As a member of the FHLB of San Francisco, we are
required to own capital stock of the FHLB and are authorized to
apply for advances from the FHLB, on a secured basis, in amounts
determined by reference to available collateral. SFR mortgage
loans, agency and AAA-rated mortgage-backed securities are the
principal collateral that may be used to secure these
borrowings, although certain other types of loans and other
assets may also be accepted pursuant to FHLB policies and
statutory requirements. Currently, the Bank is approved for
collateralized advances of up to $4.2 billion, of which
$3.5 billion were outstanding at June 30, 2003. 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 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. The proceeds from the offering are used in ongoing
operations and will fund future growth and/or repurchases of
IndyMac Bancorp stock under its share repurchase program. Upon
the adoption of FASB Interpretation No. 46,
Consolidation of Variable Interest Entities, an
Interpretation of

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Accounting Research Bulletin (ARB )
No. 51 , on July 1, 2003, the
trust has been deconsolidated from the financial statements of
the Company, which will not have a significant impact on our
consolidated financial statements.


We issued an additional $30 million of 6.05%
trust preferred securities in July 2003, the proceeds of which
will also be used in operations. These securities did not
contain any warrants on IndyMac Bancorp common stock.

Other Borrowings

Other borrowings consist of loans and securities
sold under committed financing facilities and uncommitted
agreements to repurchase. Total other borrowings decreased to
$1.8 billion at June 30, 2003, from $2.5 billion
at December 31, 2002. The decrease of $700 million was
the result of using funds generated from sales of loans and
securities, an increase in FHLB advances and an increase in
savings deposits, instead of borrowings to fund mortgage loans
originated during the three months ended June 30, 2003.

At June 30, 2003, we had $2.9 billion
in committed financing facilities, of which $1.1 billion
was utilized and $827.5 million was available to 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.




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.

As a financial institution, the lending and
borrowing functions are integral parts of our business. When
evaluating our sources and uses of cash, we consider cash used
to grow our investments, and the borrowings used to finance
those investments, separately from the Companys operating
cash flows. Our most significant use of cash is for the
acquisition of mortgage loans and securities. In accordance with
accounting principles generally accepted in the United States of
America (US GAAP), purchases of loans held for sale
and trading securities, net of sales of such loans and
securities, are required to be included in our consolidated
statements of cash flows (see page 52) as a component of
net cash used in operating activities, whereas the borrowings
used to fund a substantial portion of such loan and securities
purchases are required to be recorded in our cash flow
statements as a component of net cash provided by financing
activities. The amounts of net purchases of loans held for sale
and trading securities included as components of net cash (used
in)/provided by operating activities totaled ($1.3) billion
during the six months ended June 30, 2003 and
$360.1 million during the six months ended June 30, 2002.
Excluding the purchase and sale activities for loans held for
sale and trading securities, the net cash provided by the
Companys operating activities totaled $154.1 million
and $54.0 million for the six months ended June 30,
2003 and 2002, respectively.




ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss was
$(29.4) million at June 30, 2003, compared to
($17.7) million at December 31, 2002. This change was
a result of: (1) the decline in value of securities
classified as available for sale; and, (2) the decline in
fair value of certain interest rate swaps designated as cash
flow hedges of floating rate borrowings and does not include
related increases in the fair value of loans held for investment
that are funded by borrowings that are hedged by these interest
rate swaps. Accumulated Other Comprehensive Loss is not a
component of the determination of regulatory capital.

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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
assets for three years following the consummation of the
transaction and maintain a total risk-based capital position of
at least 10% of risk-weighted assets. This particular condition
expired on July 1, 2003 and the Bank has committed to the
OTS to maintain total risk-based capital and Tier 1 risk-based
capital (core capital minus the deduction for low-level recourse
and residual interests) equal to at least 10% and 6%,
respectively, of risk-weighted assets. As of June 30, 2003,
the Bank met all of the requirements of a
well-capitalized institution under the general
regulatory capital regulations as well as the additional
requirements of the OTS approval condition, which expired on
July 1, 2003.

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 OTS guidance
suggests that subprime portfolios be supported by capital equal
to one and one-half to three times greater than what is
appropriate for similar prime assets. The OTS has accepted the
Banks approach to conform to this guidance, which is based
on the secondary market and rating agency securitization models.
We segment the subprime loans into categories based on
quantifiable, increasing risk levels. Category I includes all
subprime loans with 1.0% to 1.5% estimated lifetime loss;
Category II includes all subprime loans with 1.5% to 2.0%
estimated lifetime loss; and Category III includes all subprime
loans with greater than 2.0% estimated lifetime loss. These
categories are risk-weighted for capital purposes at 150%, 200%
and 300% of the standard risk weighting for the asset type,
respectively. We report our subprime loan calculation in an
addendum to the Thrift Financial Report that we file with the
OTS. The levels and balances within each level were as follows
at June 30, 2003:

|             |                |                        |         |                      |  |            |     |  |  |  |    |    |  
|------------ | -------------- | ---------------------- | ------- | -------------------- |  | ---------- | --- |  |  |  | -- | -- | -
|             |                | 06/30/03               |         | Multiple of Standard |  | Risk-Based
|             |                | Balance                |         | Risk Weighting       |  | Capital % 
|             |                |                        |         |                      |  |           
|             |                |                       
|             |                | (Dollars in thousands)
|Category I   |                | $                      | 361,215 |                      |  |            | 1.5 |  |  |  | 10 | % 
|Category II  |                |                        | 92,748  |                      |  |            | 2.0 |  |  |  | 12 | % 
|Category III |                |                        | 240,197 |                      |  |            | 3.0 |  |  |  | 22 | % 
|             |                |                        |         |                      |  |            |     |  |  |  |    |   
|             | Total subprime |                        | $       | 694,160              |  |            |     |  |  |  |    | 15 | %
|             |                |                        |         |                      |  |            |     |  |  |  |    |   

As of June 30, 2003, $436.6 million or
71.5% of our subprime loans are held for sale as calculated for
regulatory reporting purposes.

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, 2003. Because not all institutions have
uniformly implemented the new subprime guidance, it is possible
that IndyMacs risk-based capital ratios will not be
comparable to other institutions. The impact of the additional
risk weighting criteria had the effect of reducing
IndyMacs risk-based capital by 124 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          |                |  | 8.53                | % |                  |  | 8.53  | % |  |  | 2.00  | %
|                | Tier 1 core       |                |  | 8.53                | % |                  |  | 8.53  | % |  |  | 5.00  | %
|                | Tier 1 risk-based |                |  | 13.79               | % |                  |  | 12.62 | % |  |  | 6.00  | %
|                | Total risk-based  |                |  | 14.46               | % |                  |  | 13.22 | % |  |  | 10.00 | %

The ratios above do not include
$40.8 million of unencumbered cash at IndyMac Bancorp that
is available for contribution to the Banks regulatory
capital. Including the excess capital held by the Bank and such
cash, we had $97.2 million of total excess capital at
June 30, 2003. Excess capital would increase to

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$258.9 million using the general
well-capitalized minimums. The additional capital requirements
of the OTS approval condition for our acquisition of SGV Bancorp
expired on July 1, 2003. As a result, the Bank became
subject to the less stringent general well-capitalized minimums.


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
Banks mix of assets, interest rate fluctuations or
significant changes in the economy in areas where the Bank has
most of its 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.

OFF-BALANCE SHEET ARRANGEMENTS

We are party to various transactions that have an
off-balance sheet component. In connection with our
securitization transactions that have been structured as sales,
there are $11.4 billion in loans owned by off-balance sheet
trusts as of June 30, 2003. 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 securities other than for
non-credit-related recourse that can arise under standard
representations and warranties.

We often retain certain interests, which may
include subordinated classes of securities, MSRs, AAA-rated and
agency interest-only securities 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.

As of June 30, 2003, we have utilized
various hedging instruments, including AAA-rated principal-only
securities, buying and/or selling mortgage-backed or
U.S. Treasury securities, futures, floors, swaps, and
options, to reduce our interest-rate exposure on these assets.
The hedging assets carried a fair value of $89.3 million at
June 30, 2003.

CONTRACTUAL OBLIGATIONS

The following table summarizes our material
contractual obligations as of June 30, 2003. The debt
includes advances from Federal Home Loan Bank, other borrowings
and trust preferred securities.

|                 |       |                        |       |                   |  |                   |        |                   |  |   |        |        |  |   |        |        | 
|---------------- | ----- | ---------------------- | ----- | ----------------- |  | ----------------- | ------ | ----------------- |  | - | ------ | ------ |  | - | ------ | ------ | 
|                 |       |                       
|                 |       | Payment Due           
|                 |       |                       
|                 |       | July 1, 2003           |       | January 1, 2004   |  | January 1, 2007   |        |                  
|                 |       | through                |       | through           |  | through           |        | After            
|                 |       | December 31, 2003      |       | December 31, 2006 |  | December 31, 2009 |        | December 31, 2009
|                 |       |                        |       |                   |  |                   |        |                  
|                 |       |                       
|                 |       | (Dollars in thousands)
|Debt             |       | $                      | 4,122 |                   |  | $                 | 679    |                   |  | $ | 455    |        |  | $ | 117    |       
|Operating Leases |       |                        | 7,750 |                   |  |                   | 40,274 |                   |  |   | 23,335 |        |  |   | 19,299 |       
|                 |       |                        |       |                   |  |                   |        |                   |  |   |        |        |  |   |        |       
|                 | Total |                        | $     | 11,872            |  |                   | $      | 40,953            |  |   | $      | 23,790 |  |   | $      | 19,416 | 
|                 |       |                        |       |                   |  |                   |        |                   |  |   |        |        |  |   |        |       




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, 2002.




INTEREST RATE RISK

Due to the characteristics of our financial
assets and liabilities and the nature of our business
activities, our financial position and results of operations may
be materially affected by changes in interest rates in

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





VALUATION RISK

In connection with the loan sale process, we
retain certain assets for which the market is limited and
illiquid. As a result, valuations are derived using complex
modeling and significant assumptions and judgments, in the
absence of third party market quotations or sale information to
value such assets. The assets include AAA-rated and agency
interest-only securities, MSRs, non-investment grade securities
and residuals. In addition, from time to time, we may acquire
these types of securities from third party issuers. These assets
represented 5% of total assets and 60% of total equity at
June 30, 2003. The fair value of these assets could vary
significantly as market conditions change.




CREDIT RISK

A significant portion of our Investment Portfolio
consists of prime residential SFR loans held for investment, and
non-investment grade securities and residuals collateralized by
mortgage loans. We also provide construction lending to
consumers and developers to build residential properties. The
credit risk profile on consumer loans is very similar to that of
our permanent mortgage loans, while builder construction loans
tend to have a higher credit risk profile than permanent
mortgage loans. While the majority of our loans are to prime
quality borrowers and secured by residential property, there is
no guarantee that, in the event of borrower default, we will be
able to recoup the full principal amount and interest due on a
loan. We have adopted underwriting and loan quality monitoring
systems, procedures and credit policies, including the
establishment and review of the allowance for loan losses, that
management believes are prudent and appropriate to minimize this
risk by tracking loan performance, assessing the likelihood of
nonperformance and diversifying our loan portfolio. Such
policies and procedures, however, may not prevent unexpected
losses that could adversely affect our results. In addition,
while we have discontinued our home improvement and manufactured
housing lending programs, we continue to liquidate portfolios of
these loans, which have greater credit risk than that of our
core mortgage loan portfolios. At June 30, 2003, the book
value of these non-core portfolios was $76.3 million, net
of reserves.

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




LIQUIDITY RISK/ ACCESS TO CAPITAL
MARKETS

We finance a substantial portion of our assets
through 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.

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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, supervision, and examination by
financial regulatory authorities covering all aspects of their
organization, management and operations. The OTS and the FDIC
are the primary federal regulatory agencies for us and our
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. 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. Our operations are also
subject to regulation at the state level, including a variety of
consumer protection provisions. Banking institutions are further
affected by the various monetary and fiscal policies of the
U.S. government, which can influence financial regulatory
actions.




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 less than 1%. A number of our
competitors have significantly larger market share and financial
resources. While we believe our small market share creates
opportunities for growth, there is no assurance that we can
effectively compete with these entities in the future.

The GSEs have made and we believe will continue
to make significant technological and economic advances to
broaden their customer bases. When the GSEs contract or expand,
there are both positive and negative impacts on our mortgage
banking lending operations. As GSEs expand, additional liquidity
is brought to the market, and loan products can be resold more
quickly. Conversely, expanding GSEs increase competition for
loans, which may reduce profit margins on loan sales. We seek to
address these competitive pressures by making a strong effort to
maximize our use of technology, by diversifying into other
residential mortgage products that are less affected by GSEs,
and by operating in a more cost-effective manner than our
competitors. There can be no assurance that these efforts will
be successful.

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




OTHER RISKS

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




CRITICAL ACCOUNTING POLICIES

Various elements of our accounting policies, by
their nature, are inherently subject to estimation techniques,
valuation assumptions and other subjective assessments. In
particular, we have identified five 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: (1) the valuation of AAA-rated
and agency interest-only securities; (2) the valuation of
MSRs; (3) the valuation of non-investment grade securities
and

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residuals; (4) the methodology for
determining our allowance for loan losses; and, (5) the
valuation of our secondary market reserves. 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, refer to
IndyMacs annual report on Form 10-K for the year
ended December 31, 2002.







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

See Overall Interest Rate Risk
Management above for quantitative and qualitative
disclosure about market risk on page 34.

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

INDYMAC BANCORP, INC. AND
SUBSIDIARIES






CONSOLIDATED BALANCE SHEETS


|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 |                                                                                                                                      |           |           |            |         |           |           |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | ----------------------- | ------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------ | --------- | --------- | ---------- | ------- | --------- | --------- | --------- | 
|                                                                                                                                                                                                                                                                                                               |                           | June 30,                |                                 | December 31,                                                                                                                        
|                                                                                                                                                                                                                                                                                                               |                           | 2003                    |                                 | 2002                                                                                                                                
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 |                                                                                                                                     
|                                                                                                                                                                                                                                                                                                               |                           | (Unaudited)             |                                 |                                                                                                                                     
|                                                                                                                                                                                                                                                                                                               |                           |                        
|                                                                                                                                                                                                                                                                                                               |                           | (Dollars in thousands) 
|ASSETS                                                                                                                                                                                                                                                                                                        
|Cash and cash equivalents                                                                                                                                                                                                                                                                                      |                           | $                       | 408,821                         |                                                                                                                                      |           | $         | 196,720    |        
|Securities classified as trading
    ($69.0 million and $472.0 million pledged as
    collateral for repurchase agreements at June 30, 2003 and
    December 31, 2002, respectively)                                                                                                                           |                           |                         | 266,784                         |                                                                                                                                      |           |           | 765,883    |        
|Mortgage-backed securities available for sale,
    amortized cost of $1.2 billion and $1.6 billion at
    June 30, 2003 and December 31, 2002, respectively
    ($1.1 billion and $974.2 million pledged as collateral
    for repurchase agreements at June 30, 2003 and
    December 31, 2002, respectively) |                           |                         | 1,158,739                       |                                                                                                                                      |           |           | 1,573,210  |        
|Loans receivable:                                                                                                                                                                                                                                                                                              |                           |                         |                                 |                                                                                                                                      |           |           |            |        
|                                                                                                                                                                                                                                                                                                               | Loans held for sale       |                         |                                 |                                                                                                                                      |           |           |            |         |          
|                                                                                                                                                                                                                                                                                                               |                           | Prime                   |                                 |                                                                                                                                      | 2,572,722 |           |            |         | 1,939,780 |          
|                                                                                                                                                                                                                                                                                                               |                           | Subprime                |                                 |                                                                                                                                      | 440,695   |           |            |         | 213,405   |          
|                                                                                                                                                                                                                                                                                                               |                           | Consumer lot loans      |                                 |                                                                                                                                      | 130,670   |           |            |         | 74,498    |          
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 |                                                                                                                                      |           |           |            |        
|                                                                                                                                                                                                                                                                                                               |                           |                         | Total loans held for sale       |                                                                                                                                      |           | 3,144,087 |            |         |           | 2,227,683 |          
|                                                                                                                                                                                                                                                                                                               | Loans held for investment |                         |                                 |                                                                                                                                      |           |           |            |         |          
|                                                                                                                                                                                                                                                                                                               |                           | SFR mortgage            |                                 |                                                                                                                                      | 2,465,393 |           |            |         | 2,096,517 |          
|                                                                                                                                                                                                                                                                                                               |                           | Land and other mortgage |                                 |                                                                                                                                      | 94,166    |           |            |         | 130,454   |          
|                                                                                                                                                                                                                                                                                                               |                           | Builder construction    |                                 |                                                                                                                                      | 509,196   |           |            |         | 482,408   |          
|                                                                                                                                                                                                                                                                                                               |                           | Consumer construction   |                                 |                                                                                                                                      | 988,020   |           |            |         | 875,335   |          
|                                                                                                                                                                                                                                                                                                               |                           | Income property         |                                 |                                                                                                                                      | 46,966    |           |            |         | 64,053    |          
|                                                                                                                                                                                                                                                                                                               |                           | HELOC                   |                                 |                                                                                                                                      | 485,471   |           |            |         | 312,881   |          
|                                                                                                                                                                                                                                                                                                               | Allowance for loan losses |                         |                                 | (50,042                                                                                                                              | )         |           |            | (50,761 | )        
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 |                                                                                                                                      |           |           |            |        
|                                                                                                                                                                                                                                                                                                               |                           |                         | Total loans held for investment |                                                                                                                                      |           | 4,539,170 |            |         |           | 3,910,887 |          
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 |                                                                                                                                      |           |           |            |        
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 | Total loans receivable ($1.7 billion pledged
    as collateral for repurchase agreements at June 30, 2003
    and December 31, 2002) |           |           | 7,683,257  |         |           |           | 6,138,570 | 
|Mortgage servicing rights                                                                                                                                                                                                                                                                                      |                           |                         | 335,727                         |                                                                                                                                      |           |           | 300,539    |        
|Investment in Federal Home Loan Bank stock, at
    cost                                                                                                                                                                                                                                                        |                           |                         | 232,345                         |                                                                                                                                      |           |           | 155,443    |        
|Interest receivable                                                                                                                                                                                                                                                                                            |                           |                         | 47,625                          |                                                                                                                                      |           |           | 47,089     |        
|Goodwill and other intangible assets                                                                                                                                                                                                                                                                           |                           |                         | 34,101                          |                                                                                                                                      |           |           | 34,549     |        
|Foreclosed assets                                                                                                                                                                                                                                                                                              |                           |                         | 31,028                          |                                                                                                                                      |           |           | 36,526     |        
|Other assets                                                                                                                                                                                                                                                                                                   |                           |                         | 462,968                         |                                                                                                                                      |           |           | 325,925    |        
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 |                                                                                                                                      |           |           |            |        
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 | Total assets                                                                                                                         |           | $         | 10,661,395 |         |           | $         | 9,574,454 | 
|                                                                                                                                                                                                                                                                                                               |                           |                         |                                 |                                                                                                                                      |           |           |            |        

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INDYMAC BANCORP, INC. AND
SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS 
(Continued)

|                                         |                                                                                                                                                                                                                             |                                            |           |              |            |   |           |           |           | 
|---------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | ------------ | ---------- | - | --------- | --------- | --------- | 
|                                         |                                                                                                                                                                                                                             | June 30,                                   |           | December 31,
|                                         |                                                                                                                                                                                                                             | 2003                                       |           | 2002        
|                                         |                                                                                                                                                                                                                             |                                            |           |             
|                                         |                                                                                                                                                                                                                             | (Unaudited)                                |           |             
|                                         |                                                                                                                                                                                                                             |                                           
|                                         |                                                                                                                                                                                                                             | (Dollars in thousands)                    
|LIABILITIES AND SHAREHOLDERS
    EQUITY
|Deposits                                 |                                                                                                                                                                                                                             | $                                          | 3,903,485 |              |            | $ | 3,140,502 |          
|Advances from Federal Home Loan Bank     |                                                                                                                                                                                                                             |                                            | 3,452,834 |              |            |   | 2,721,783 |          
|Other borrowings                         |                                                                                                                                                                                                                             |                                            | 1,803,044 |              |            |   | 2,491,715 |          
|Trust preferred securities               |                                                                                                                                                                                                                             |                                            | 117,097   |              |            |   | 116,819   |          
|Other liabilities                        |                                                                                                                                                                                                                             |                                            | 472,376   |              |            |   | 253,670   |          
|                                         |                                                                                                                                                                                                                             |                                            |           |              |            |   |           |          
|                                         |                                                                                                                                                                                                                             | Total liabilities                          |           |              | 9,748,836  |   |           |           | 8,724,489 | 
|Shareholders Equity                     |                                                                                                                                                                                                                             |                                            |           |              |            |   |           |          
|                                         | Preferred stock  authorized,
    10,000,000 shares of $0.01 par value; none issued                                                                                                                                         |                                            |           |             |            |   |           |          |          
|                                         | Common stock  authorized, 200,000,000
    shares of $0.01 par value; issued 84,517,758 shares (55,364,271
    outstanding) at June 30, 2003 and issued 83,959,547 shares
    (54,829,486 outstanding) at December 31, 2002 |                                            |           | 845          |            |   |           | 840       |          
|                                         | Additional paid-in-capital                                                                                                                                                                                                  |                                            |           | 1,015,314    |            |   |           | 1,007,936 |          
|                                         | Accumulated other comprehensive loss                                                                                                                                                                                        |                                            |           | (29,356      | )          |   |           | (17,747   | )        
|                                         | Retained earnings                                                                                                                                                                                                           |                                            |           | 444,975      |            |   |           | 377,707   |          
|                                         | Treasury stock, 29,153,487 shares and 29,130,061
    shares at June 30, 2003 and December 31, 2002,
    respectively                                                                                                        |                                            |           | (519,219     | )          |   |           | (518,771  | )        
|                                         |                                                                                                                                                                                                                             |                                            |           |              |            |   |           |          
|                                         |                                                                                                                                                                                                                             | Total shareholders equity                 |           |              | 912,559    |   |           |           | 849,965   | 
|                                         |                                                                                                                                                                                                                             |                                            |           |              |            |   |           |          
|                                         |                                                                                                                                                                                                                             | Total liabilities and shareholders equity |           | $            | 10,661,395 |   |           | $         | 9,574,454 | 
|                                         |                                                                                                                                                                                                                             |                                            |           |              |            |   |           |          

The accompanying notes are an integral part of
these statements.

49



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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,    
|                                           |                                               |                                                         |        |                   
|                                           |                                               | 2003                                                    |        | 2002               |         | 2003 |        | 2002  
|                                           |                                               |                                                         |        |                    |         |      |        |       
|                                           |                                               |                                                        
|                                           |                                               | (Unaudited)                                            
|                                           |                                               | (Dollars in thousands, except per share data)          
|Interest income                            |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|Mortgage-backed and other securities       |                                               | $                                                       | 16,111 |                    |         | $    | 27,933 |        |         | $ | 37,072  |         |         | $ | 56,815  |        
|Loans held for sale                        |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           | Prime                                         |                                                         |        | 43,344             |         |      |        | 26,102 |         |   |         | 80,768  |         |   |         | 59,429  |        
|                                           | Subprime                                      |                                                         |        | 7,142              |         |      |        | 2,271  |         |   |         | 13,386  |         |   |         | 5,687   |        
|                                           | Consumer lot loans                            |                                                         |        | 1,974              |         |      |        |       |         |   |         | 3,507   |         |   |         |        |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Total loans held for sale                               |        |                    | 52,460  |      |        |        | 28,373  |   |         |         | 97,661  |   |         |         | 65,116  | 
|Loans held for investment                  |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           | SFR mortgage                                  |                                                         |        | 30,458             |         |      |        | 22,782 |         |   |         | 59,973  |         |   |         | 46,016  |        
|                                           | Land and other mortgage                       |                                                         |        | 1,792              |         |      |        | 6,194  |         |   |         | 4,093   |         |   |         | 12,554  |        
|                                           | Builder construction                          |                                                         |        | 8,682              |         |      |        | 9,438  |         |   |         | 17,283  |         |   |         | 19,731  |        
|                                           | Consumer construction                         |                                                         |        | 14,639             |         |      |        | 13,949 |         |   |         | 29,035  |         |   |         | 27,926  |        
|                                           | Income property                               |                                                         |        | 1,086              |         |      |        | 1,487  |         |   |         | 2,205   |         |   |         | 2,593   |        
|                                           | HELOC                                         |                                                         |        | 4,951              |         |      |        | 1,819  |         |   |         | 9,098   |         |   |         | 3,124   |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Total loans held for investment                         |        |                    | 61,608  |      |        |        | 55,669  |   |         |         | 121,687 |   |         |         | 111,944 | 
|Other                                      |                                               |                                                         | 2,298  |                    |         |      | 1,585  |        |         |   | 4,254   |         |         |   | 3,367   |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Total interest income                                   |        |                    | 132,477 |      |        |        | 113,560 |   |         |         | 260,674 |   |         |         | 237,242 | 
|Interest expense                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|Deposits                                   |                                               |                                                         | 21,950 |                    |         |      | 26,828 |        |         |   | 43,638  |         |         |   | 58,136  |        
|Advances from Federal Home Loan Bank       |                                               |                                                         | 28,308 |                    |         |      | 25,004 |        |         |   | 53,866  |         |         |   | 49,393  |        
|Trust preferred securities                 |                                               |                                                         | 2,765  |                    |         |      | 2,757  |        |         |   | 5,528   |         |         |   | 5,513   |        
|Other borrowings                           |                                               |                                                         | 11,939 |                    |         |      | 9,768  |        |         |   | 27,102  |         |         |   | 21,243  |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Total interest expense                                  |        |                    | 64,962  |      |        |        | 64,357  |   |         |         | 130,134 |   |         |         | 134,285 | 
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Net interest income                                     |        |                    | 67,515  |      |        |        | 49,203  |   |         |         | 130,540 |   |         |         | 102,957 | 
|Provision for loan losses                  |                                               |                                                         | 6,900  |                    |         |      | 3,568  |        |         |   | 10,000  |         |         |   | 7,754   |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Net interest income after provision for loan
    losses |        |                    | 60,615  |      |        |        | 45,635  |   |         |         | 120,540 |   |         |         | 95,203  | 
|Other income                               |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           | Gain on sale of loans                         |                                                         |        | 102,146            |         |      |        | 71,280 |         |   |         | 185,929 |         |   |         | 148,746 |        
|                                           | Service fee (loss) income                     |                                                         |        | (1,401             | )       |      |        | 6,405  |         |   |         | 982     |         |   |         | 14,227  |        
|                                           | (Loss)gain on mortgage-backed securities, net |                                                         |        | (9,258             | )       |      |        | 2,701  |         |   |         | (16,168 | )       |   |         | (4,287  | )      
|                                           | Fee and other income                          |                                                         |        | 21,251             |         |      |        | 12,680 |         |   |         | 38,979  |         |   |         | 26,289  |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Total other income                                      |        |                    | 112,738 |      |        |        | 93,066  |   |         |         | 209,722 |   |         |         | 184,975 | 
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Net revenues                                            |        |                    | 173,353 |      |        |        | 138,701 |   |         |         | 330,262 |   |         |         | 280,178 | 
|Other expense                              |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           | Operating expenses                            |                                                         |        | 104,758            |         |      |        | 80,702 |         |   |         | 200,416 |         |   |         | 160,256 |        
|                                           | Amortization of other intangible assets       |                                                         |        | 217                |         |      |        | 280    |         |   |         | 448     |         |   |         | 579     |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Total other expense                                     |        |                    | 104,975 |      |        |        | 80,982  |   |         |         | 200,864 |   |         |         | 160,835 | 
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|Earnings before provision for income taxes |                                               |                                                         | 68,378 |                    |         |      | 57,719 |        |         |   | 129,398 |         |         |   | 119,343 |        
|                                           | Provision for income taxes                    |                                                         |        | 27,009             |         |      |        | 23,145 |         |   |         | 51,112  |         |   |         | 48,750  |        
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           |                                               | Net earnings                                            |        | $                  | 41,369  |      |        | $      | 34,574  |   |         | $       | 78,286  |   |         | $       | 70,593  | 
|                                           |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|Earnings per share                         |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           | Basic                                         |                                                         | $      | 0.75               |         |      | $      | 0.58   |         |   | $       | 1.43    |         |   | $       | 1.17    |        
|                                           | Diluted                                       |                                                         | $      | 0.73               |         |      | $      | 0.56   |         |   | $       | 1.39    |         |   | $       | 1.14    |        
|Weighted average shares outstanding        |                                               |                                                         |        |                    |         |      |        |        |         |   |         |         |         |   |         |        
|                                           | Basic                                         |                                                         |        | 55,015             |         |      |        | 60,050 |         |   |         | 54,922  |         |   |         | 60,139  |        
|                                           | Diluted                                       |                                                         |        | 56,711             |         |      |        | 61,763 |         |   |         | 56,345  |         |   |         | 61,903  |        
|Dividends declared per share               |                                               | $                                                       | 0.10   |                    |         |      |       |        |         | $ | 0.20    |         |         |   |        |        

The accompanying notes are an integral part of
these statements.

50



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY AND COMPREHENSIVE INCOME

|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |        |   |  |   |          |   |  |   |         |  
|--------------------------------------------------------------- |  | ---------------------- | ---------- | ------ |  | ---------- | --- | ------------- |  | -------- | --------- | ------------- |  | -------- | ------- | ------------- |  | - | ------- | - |  | - | ------ | - |  | - | -------- | - |  | - | ------- | -
|                                                                |  |                        |            |        |  |            |     | Accumulated   |  |          |           |               |  |          |         |              
|                                                                |  |                        |            |        |  |            |     | Other         |  |          |           |               |  |          |         |              
|                                                                |  |                        |            |        |  | Additional |     | Comprehensive |  |          |           | Total         |  |          |         | Total        
|                                                                |  | Shares                 |            | Common |  | Paid-In-   |     | Income        |  | Retained |           | Comprehensive |  | Treasury |         | Shareholders
|                                                                |  | Outstanding            |            | Stock  |  | Capital    |     | (Loss)        |  | Earnings |           | Income        |  | Stock    |         | Equity       
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |              
|                                                                |  |                       
|                                                                |  | (Unaudited)           
|                                                                |  | (Dollars in thousands)
|Balance at December 31, 2001                                    |  |                        | 60,366,266 |        |  | $          | 833 |               |  | $        | 996,649   |               |  | $        | 570     |               |  | $ | 234,314 |   |  | $ |       |   |  | $ | (387,228 | ) |  | $ | 845,138 |  
|Common stock options exercised                                  |  |                        | 411,174    |        |  |            | 4   |               |  |          | 7,969     |               |  |          |        |               |  |   |        |   |  |   |       |   |  |   |         |   |  |   | 7,973   |  
|Net directors and officers notes
    (receivables)            |  |                        |           |        |  |            |    |               |  |          | (379      | )             |  |          |        |               |  |   |        |   |  |   |       |   |  |   |         |   |  |   | (379    | )
|Deferred compensation, restricted stock                         |  |                        | 17,040     |        |  |            |    |               |  |          | 857       |               |  |          |        |               |  |   |        |   |  |   |       |   |  |   |         |   |  |   | 857     |  
|Net loss on mortgage securities available for sale              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | 8,772   |               |  |   |        |   |  |   | 8,772  |   |  |   |         |   |  |   | 8,772   |  
|Net unrealized loss on derivatives used in cash
    flow hedges |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (3,970  | )             |  |   |        |   |  |   | (3,970 | ) |  |   |         |   |  |   | (3,970  | )
|Dividend reinvestment plan                                      |  |                        | 1,341      |        |  |            |    |               |  |          | 33        |               |  |          |        |               |  |   |        |   |  |   |       |   |  |   |         |   |  |   | 33      |  
|Purchases of common stock                                       |  |                        | (1,545,189 | )      |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  |   |       |   |  |   | (36,689  | ) |  |   | (36,689 | )
|Net earnings                                                    |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   | 70,593  |   |  |   | 70,593 |   |  |   |         |   |  |   | 70,593  |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |        |   |  |   |          |   |  |   |         |  
|Total comprehensive income                                      |  |                        |           |        |  |            |    |               |  |          |          |               |  |          |        |               |  |   |        |   |  | $ | 75,395 |   |  |   |         |   |  |   |        |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |        |   |  |   |          |   |  |   |         |  
|Balance at June 30, 2002                                        |  |                        | 59,250,632 |        |  | $          | 837 |               |  | $        | 1,005,129 |               |  | $        | 5,372   |               |  | $ | 304,907 |   |  |   |        |   |  | $ | (423,917 | ) |  | $ | 892,328 |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |        |   |  |   |          |   |  |   |         |  
|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   |  
|Net directors and officers notes
    payments                 |  |                        |           |        |  |            |    |               |  |          | 196       |               |  |          |        |               |  |   |        |   |  |   |       |   |  |   |         |   |  |   | 196     |  
|Deferred compensation, restricted stock                         |  |                        | 172,587    |        |  |            |    |               |  |          | 1,050     |               |  |          |        |               |  |   |        |   |  |   |       |   |  |   |         |   |  |   | 1,050   |  
|Net loss on mortgage securities available for sale              |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (7,014  | )             |  |   |        |   |  |   | (7,014 | ) |  |   |         |   |  |   | (7,014  | )
|Net unrealized loss on derivatives used in cash
    flow hedges |  |                        |           |        |  |            |    |               |  |          |          |               |  |          | (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 |  
|                                                                |  |                        |            |        |  |            |     |               |  |          |           |               |  |          |         |               |  |   |         |   |  |   |        |   |  |   |          |   |  |   |         |  

The accompanying notes are an integral part of
these statements.

51



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES






CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |          |          |          |  
|------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | -------- | ---------- | ---------- | ------- | -------- | -------- | -------- | -
|                                                                          |                                                                                                   |                                                                    
|                                                                          |                                                                                                   | For the Six Months                                                 
|                                                                          |                                                                                                   | Ended June 30,                                                     
|                                                                          |                                                                                                   |                                                                    
|                                                                          |                                                                                                   | 2003                                                                |                                                                                                              | 2002    
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |         
|                                                                          |                                                                                                   |                                                                    
|                                                                          |                                                                                                   | (Unaudited)                                                        
|                                                                          |                                                                                                   | (Dollars in thousands)                                             
|Cash flows from operating
    activities:                                 |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          | Net earnings                                                                                      |                                                                     | $                                                                                                            | 78,286   |            |            | $       | 70,593   |         
|                                                                          | Adjustments to reconcile net earnings to net cash
    (used in) provided by operating activities: |                                                                     |                                                                                                              |          |            |            |         |          |         
|                                                                          |                                                                                                   | Total amortization and depreciation                                 |                                                                                                              |          | 99,159     |            |         |          | 62,733   |         
|                                                                          |                                                                                                   | Provision for valuation adjustment of mortgage
    servicing rights |                                                                                                              |          | 41,536     |            |         |          | 27,579   |         
|                                                                          |                                                                                                   | Gain on sale of loans                                               |                                                                                                              |          | (185,929   | )          |         |          | (148,746 | )       
|                                                                          |                                                                                                   | Loss on mortgage-backed securities, net                             |                                                                                                              |          | 16,168     |            |         |          | 4,287    |         
|                                                                          |                                                                                                   | Provision for loan losses                                           |                                                                                                              |          | 10,000     |            |         |          | 7,754    |         
|                                                                          |                                                                                                   | Net decrease in other assets and liabilities                        |                                                                                                              |          | 93,634     |            |         |          | 30,675   |         
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          |                                                                                                   |                                                                     | Net cash provided by operating activities before
    activity for trading securities and held for sale loans |          |            | 152,854    |         |          |          | 54,875   |  
|                                                                          |                                                                                                   | Net sales (purchases) of trading securities                         |                                                                                                              |          | 520,647    |            |         |          | (376,879 | )       
|                                                                          |                                                                                                   | Net (purchases) sales of loans held for sale                        |                                                                                                              |          | (1,843,049 | )          |         |          | 737,010  |         
|                                                                          |                                                                                                   | Net decrease (increase) of mortgage
    servicing rights            |                                                                                                              |          | 1,226      |            |         |          | (853     | )       
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          |                                                                                                   |                                                                     | Net cash (used in) provided by operating
    activities                                                      |          |            | (1,168,322 | )       |          |          | 414,153  |  
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|Cash flows from investing
    activities:                                 |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          | Net sales (purchases) of and payments from
    loans held for investment                          |                                                                     |                                                                                                              | 272,790  |            |            |         | (269,751 | )       
|                                                                          | Net payments of mortgage-backed securities
    available for sale                                 |                                                                     |                                                                                                              | 400,890  |            |            |         | 29,672   |         
|                                                                          | Net increase in investment in Federal Home Loan
    Bank stock, at cost                           |                                                                     |                                                                                                              | (76,902  | )          |            |         | (7,124   | )       
|                                                                          | Net purchases of property, plant and equipment                                                    |                                                                     |                                                                                                              | (16,240  | )          |            |         | (26,842  | )       
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          |                                                                                                   |                                                                     | Net cash provided by (used in) investing
    activities                                                      |          |            | 580,538    |         |          |          | (274,045 | )
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|Cash flows from financing
    activities:                                 |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          | Net increase (decrease) in deposits                                                               |                                                                     |                                                                                                              | 762,983  |            |            |         | (432,735 | )       
|                                                                          | Net increase (decrease) in advances from
    Federal Home Loan Bank                               |                                                                     |                                                                                                              | 730,914  |            |            |         | (12,767  | )       
|                                                                          | Net (decrease) increase in other borrowings                                                       |                                                                     |                                                                                                              | (688,879 | )          |            |         | 289,960  |         
|                                                                          | Net proceeds/payments from stock options and
    notes receivable                                 |                                                                     |                                                                                                              | 6,333    |            |            |         | 7,707    |         
|                                                                          | Cash dividends paid                                                                               |                                                                     |                                                                                                              | (11,018  | )          |            |         |         |         
|                                                                          | Purchases of common stock                                                                         |                                                                     |                                                                                                              | (448     | )          |            |         | (36,689  | )       
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          |                                                                                                   |                                                                     | Net cash provided by (used in) financing
    activities                                                      |          |            | 799,885    |         |          |          | (184,524 | )
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|Net increase (decrease) in cash and cash
    equivalents                  |                                                                                                   |                                                                     | 212,101                                                                                                      |          |            |            | (44,416 | )       
|Cash and cash equivalents at beginning of period                          |                                                                                                   |                                                                     | 196,720                                                                                                      |          |            |            | 153,295 |         
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|Cash and cash equivalents at end of period                                |                                                                                                   | $                                                                   | 408,821                                                                                                      |          |            | $          | 108,879 |         
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|Supplemental cash flow information:                                       |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          |                                                                                                   |                                                                     | Cash paid for interest                                                                                       |          | $          | 132,804    |         |          | $        | 132,039  |  
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          |                                                                                                   |                                                                     | Cash paid for income taxes                                                                                   |          | $          | 6,208      |         |          | $        | 611      |  
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|Supplemental disclosure of noncash investing
    and financing activities |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         
|                                                                          |                                                                                                   |                                                                     | Net transfer of loans held for sale to
    (from) loans held for investment                                  |          | $          | 925,550    |         |          | $        | (413,891 | )
|                                                                          |                                                                                                   |                                                                     |                                                                                                              |          |            |            |         |         

The accompanying notes are an integral part of
these statements.

52



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES






NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

June 30, 2003


(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
mortgage banking. 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, 2003 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2003.
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, 2002.

Note 2  Newly Adopted or
Issued Accounting Pronouncements

In January 2003, the FASB issued Interpretation
No. 46, Consolidation of Variable Interest Entities, and
Interpretation of Accounting Research Bulletin
(ARB) No. 51, (the Interpretation). The Interpretation
introduces a new consolidation model  the variable
interests model  which determines control (and
consolidation) based on potential variability in gains or losses
of the entity being evaluated for consolidation. The party with
the majority of the variability in gains or losses of the
variable interest entity (VIE) is required to consolidate
the VIE. However, qualifying special-purpose entities defined
under SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities, are not required to be consolidated in the
financial statements of a transferor. We adopted the
Interpretation on July 1, 2003 which did not result in any
material impact or change on our financial statements.

The FASB issued Statement of Financial Accounting
Standards No. 149 (SFAS No. 149), Amendment of
Statement 133 on Derivative Instruments and Hedging
Activities on April 30, 2003. SFAS No. 149 does
not amend the definition of a derivative. The provisions of SFAS
No. 149 merely represent the codification of previous
Derivatives Implementation Group decisions, which are already
effective and being applied. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003, and
hedging relationships designated after June 30, 2003. The
adoption of SFAS No. 149 did not have a material impact on
the financial condition or the operating results of the Company.

On May 15, 2003, the FASB issued Statement
of Financial Accounting Standards No. 150 (SFAS
No. 150), Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and
Equity. SFAS No. 150 requires liability accounting
for certain freestanding financial instruments that are either
indexed to, or potentially settled in shares of the issuer. SFAS
No. 150 does not apply to obligations incurred pursuant to
stock compensation arrangements accounted for under APB Opinion
No. 25, Accounting for Stock Issued to
Employees. SFAS No. 150 is effective for all
financial instruments created or modified after May 31,
2003, and otherwise effective for the Company on July 1,
2003. Application of SFAS No. 150 to instruments that exist
on the date of adoption should be reported through a cumulative
effect of a change in an accounting principle. The adoption of
SFAS No. 150 did not have a material impact on the
financial condition or the operating results of the Company.

53



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Note 3  Securities

The following table details our securities
classified as trading and mortgage-backed securities available
for sale as of June 30, 2003 and December 31, 2002,
respectively.

|                                               |                                               |                        |   |              |           |  |   |           |           | 
|---------------------------------------------- | --------------------------------------------- | ---------------------- | - | ------------ | --------- |  | - | --------- | --------- | 
|                                               |                                               | June 30,               |   | December 31,
|                                               |                                               | 2003                   |   | 2002        
|                                               |                                               |                        |   |             
|                                               |                                               |                       
|                                               |                                               | (Dollars in thousands)
|Securities classified as trading:              |                                               |                        |   |              |           |  |   |          
|                                               | AAA-rated and agency interest-only securities |                        | $ | 135,264      |           |  | $ | 187,060   |          
|                                               | AAA-rated principal-only securities           |                        |   | 4,255        |           |  |   | 79,554    |          
|                                               | U.S. Treasury securities                      |                        |   | 50,414       |           |  |   | 282,219   |          
|                                               | AAA-rated non-agency securities               |                        |   |             |           |  |   | 101,185   |          
|                                               | AAA-rated agency securities                   |                        |   |             |           |  |   | 25,055    |          
|                                               | Other investment grade securities             |                        |   | 8,760        |           |  |   | 9,114     |          
|                                               | Other non-investment grade securities         |                        |   | 2,060        |           |  |   | 2,956     |          
|                                               | Residual securities                           |                        |   | 66,031       |           |  |   | 78,740    |          
|                                               |                                               |                        |   |              |           |  |   |          
|                                               |                                               | Total                  |   | $            | 266,784   |  |   | $         | 765,883   | 
|                                               |                                               |                        |   |              |           |  |   |          
|Mortgage-backed securities available for sale: |                                               |                        |   |              |           |  |   |          
|                                               | AAA-rated non-agency securities               |                        | $ | 1,070,270    |           |  | $ | 1,406,321 |          
|                                               | AAA-rated agency securities                   |                        |   | 46,544       |           |  |   | 123,269   |          
|                                               | Other investment grade securities             |                        |   | 33,272       |           |  |   | 39,258    |          
|                                               | Other non-investment grade securities         |                        |   | 8,653        |           |  |   | 4,362     |          
|                                               |                                               |                        |   |              |           |  |   |          
|                                               |                                               | Total                  |   | $            | 1,158,739 |  |   | $         | 1,573,210 | 
|                                               |                                               |                        |   |              |           |  |   |          

Note 4  Segment
Reporting

IndyMac operates through its three main segments:
IndyMac Mortgage Bank, IndyMac Consumer Bank and the 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. IndyMac Consumer Bank provides
the platform for the mortgage and deposit services that IndyMac
offers directly to consumers. Loans produced by IndyMac Mortgage
Bank and IndyMac Consumer Bank are then securitized through the
issuance of mortgage-backed securities, sold to
government-sponsored enterprises, 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.

Prior to 2003, we managed our business through
only two operating segments: Mortgage Banking and Investment
Portfolio. Previously, our consumer mortgage loan production
business units were included with Mortgage Banking, and our
consumer banking operations were included as overhead to the
Company, or Other. Segment information for 2002,
including a change in the allocation method of interest expense
to the operating segments, has been adjusted to conform to the
current method of segment disclosure.

The profitability of each operating segment is
measured on a fully-leveraged basis after allocating capital
based on regulatory capital rules. The Company uses a
match-funded transfer pricing system to allocate net

54



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

Segment information for the three and six months
ended June 30, 2003 and 2002 was as follows:

|                                 |                               |                        |           |          |  |            |           |        |  |              |           |        |  |   |         |         |   |   |            |         | 
|-------------------------------- | ----------------------------- | ---------------------- | --------- | -------- |  | ---------- | --------- | ------ |  | ------------ | --------- | ------ |  | - | ------- | ------- | - | - | ---------- | ------- | 
|                                 |                               | IndyMac                |           | IndyMac  |  | Investment |           |        |  |             
|                                 |                               | Mortgage               |           | Consumer |  | Portfolio  |           |        |  |             
|                                 |                               | Bank                   |           | Bank     |  | Group      |           | Other  |  | Consolidated
|                                 |                               |                        |           |          |  |            |           |        |  |             
|                                 |                               |                       
|                                 |                               | (Dollars in thousands)
|Three months ended June 30, 2003 |                               |                        |           |          |  |            |           |        |  |              |           |        |  |   |         |         |   |   |            |        
|                                 | Net interest income (expense) |                        | $         | 45,300   |  |            | $         | 11,491 |  |              | $         | 19,022 |  |   | $       | (8,298  | ) |   | $          | 67,515  | 
|                                 | Net revenues (loss)           |                        |           | 125,953  |  |            |           | 47,288 |  |              |           | 16,635 |  |   |         | (16,523 | ) |   |            | 173,353 | 
|                                 | Net earnings (loss)           |                        |           | 48,955   |  |            |           | 13,951 |  |              |           | 3,557  |  |   |         | (25,094 | ) |   |            | 41,369  | 
|Assets as of June 30, 2003       |                               | $                      | 3,999,004 |          |  | $          | 1,077,683 |        |  | $            | 4,880,072 |        |  | $ | 704,636 |         |   | $ | 10,661,395 |        
|Three months ended June 30, 2002 |                               |                        |           |          |  |            |           |        |  |              |           |        |  |   |         |         |   |   |            |        
|                                 | Net interest income (expense) |                        | $         | 36,637   |  |            | $         | 7,545  |  |              | $         | 17,353 |  |   | $       | (12,332 | ) |   | $          | 49,203  | 
|                                 | Net revenues (loss)           |                        |           | 101,962  |  |            |           | 25,077 |  |              |           | 26,338 |  |   |         | (14,676 | ) |   |            | 138,701 | 
|                                 | Net earnings (loss)           |                        |           | 39,546   |  |            |           | 5,212  |  |              |           | 10,276 |  |   |         | (20,460 | ) |   |            | 34,574  | 
|Assets as of June 30, 2002       |                               | $                      | 2,598,407 |          |  | $          | 374,841   |        |  | $            | 4,195,349 |        |  | $ | 266,237 |         |   | $ | 7,434,834  |        

|                               |                               |                        |           |          |  |            |           |        |  |              |           |        |  |   |         |         |   |   |            |         | 
|------------------------------ | ----------------------------- | ---------------------- | --------- | -------- |  | ---------- | --------- | ------ |  | ------------ | --------- | ------ |  | - | ------- | ------- | - | - | ---------- | ------- | 
|                               |                               | IndyMac                |           | IndyMac  |  | Investment |           |        |  |             
|                               |                               | Mortgage               |           | Consumer |  | Portfolio  |           |        |  |             
|                               |                               | Bank                   |           | Bank     |  | Group      |           | Other  |  | Consolidated
|                               |                               |                        |           |          |  |            |           |        |  |             
|                               |                               |                       
|                               |                               | (Dollars in thousands)
|Six months ended June 30, 2003 |                               |                        |           |          |  |            |           |        |  |              |           |        |  |   |         |         |   |   |            |        
|                               | Net interest income (expense) |                        | $         | 89,051   |  |            | $         | 21,902 |  |              | $         | 38,107 |  |   | $       | (18,520 | ) |   | $          | 130,540 | 
|                               | Net revenues (loss)           |                        |           | 242,452  |  |            |           | 84,991 |  |              |           | 36,927 |  |   |         | (34,108 | ) |   |            | 330,262 | 
|                               | Net earnings (loss)           |                        |           | 94,486   |  |            |           | 23,794 |  |              |           | 10,056 |  |   |         | (50,050 | ) |   |            | 78,286  | 
|Assets as of June 30, 2003     |                               | $                      | 3,999,004 |          |  | $          | 1,077,683 |        |  | $            | 4,880,072 |        |  | $ | 704,636 |         |   | $ | 10,661,395 |        
|Six months ended June 30, 2002 |                               |                        |           |          |  |            |           |        |  |              |           |        |  |   |         |         |   |   |            |        
|                               | Net interest income (expense) |                        | $         | 79,645   |  |            | $         | 16,070 |  |              | $         | 37,563 |  |   | $       | (30,321 | ) |   | $          | 102,957 | 
|                               | Net revenues (loss)           |                        |           | 216,915  |  |            |           | 51,090 |  |              |           | 47,321 |  |   |         | (35,148 | ) |   |            | 280,178 | 
|                               | Net earnings (loss)           |                        |           | 85,346   |  |            |           | 10,822 |  |              |           | 17,549 |  |   |         | (43,124 | ) |   |            | 70,593  | 
|Assets as of June 30, 2002     |                               | $                      | 2,598,407 |          |  | $          | 374,841   |        |  | $            | 4,195,349 |        |  | $ | 266,237 |         |   | $ | 7,434,834  |        

Note 5  Stock-Based
Compensation

We have two stock incentive plans, the 2002
Incentive Plan and the 2000 Stock Incentive Plan (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).
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 No. 123,
Accounting for Stock-Based Compensation(SFAS
No. 123), we continue to measure and recognize compensation
expense using the intrinsic value method specified in

55



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees(APB
No. 25). As required under the provisions of SFAS
No. 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, 2003 and 2002:

|                           |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |        |        |  
|-------------------------- | ----------- | -------------------------------- | - | ---------------------- | ------ | ---- | - | ------ | ------ | - | - | ------ | ------ | - | - | ------ | ------ | -
|                           |             |                                  |   |                       
|                           |             | Three Months Ended               |   | Six Months Ended      
|                           |             | June 30,                         |   | June 30,              
|                           |             |                                  |   |                       
|                           |             | 2003                             |   | 2002                   |        | 2003 |   | 2002  
|                           |             |                                  |   |                        |        |      |   |       
|                           |             |                                  |   |                       
|                           |             | (Dollars in thousands,           |   | (Dollars in thousands,
|                           |             | except per share data)           |   | except per share data)
|Net Earnings               |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | As reported |                                  | $ | 41,369                 |        |      | $ | 34,574 |        |   | $ | 78,286 |        |   | $ | 70,953 |       
|                           |             | Stock-based compensation expense |   |                        | (4,575 | )    |   |        | (5,753 | ) |   |        | (9,110 | ) |   |        | (9,575 | )
|                           |             | Tax effect                       |   |                        | 1,807  |      |   |        | 2,272  |   |   |        | 3,598  |   |   |        | 3,782  |  
|                           |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | Pro forma   |                                  | $ | 38,601                 |        |      | $ | 31,093 |        |   | $ | 72,774 |        |   | $ | 65,160 |       
|                           |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|Basic Earnings Per Share   |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | As reported |                                  | $ | 0.75                   |        |      | $ | 0.58   |        |   | $ | 1.43   |        |   | $ | 1.17   |       
|                           | Pro forma   |                                  | $ | 0.70                   |        |      | $ | 0.52   |        |   | $ | 1.33   |        |   | $ | 1.08   |       
|Diluted Earnings Per Share |             |                                  |   |                        |        |      |   |        |        |   |   |        |        |   |   |       
|                           | As reported |                                  | $ | 0.73                   |        |      | $ | 0.56   |        |   | $ | 1.39   |        |   | $ | 1.14   |       
|                           | Pro forma   |                                  | $ | 0.68                   |        |      | $ | 0.50   |        |   | $ | 1.29   |        |   | $ | 1.05   |       

In addition, during the three months ended
June 30, 2003 and 2002, we recognized compensation expense
of $561 thousand ($339 thousand, net of taxes) and $453 thousand
($274 thousand, net of taxes), respectively, related to
restricted stock awards. These expenses were included in net
earnings as reported.




ITEM 4.     CONTROLS
AND PROCEDURES

As of June 30, 2003, 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, 2003. 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, 2003.

56



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##### Table of Contents



INDYMAC BANCORP, INC. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






PART II. OTHER INFORMATION




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

At the annual meeting of IndyMac Bancorps
stockholders held on April 30, 2003, 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  |  |            | 45,814,179 |                 |  |  | 5,331,224  | 
|Louis E. Caldera  |  |            | 49,414,258 |                 |  |  | 1,731,145  | 
|Lyle E. Gramley   |  |            | 50,049,388 |                 |  |  | 1,096,015  | 
|Hugh M. Grant     |  |            | 33,613,435 |                 |  |  | 17,531,968 | 
|Patrick C. Haden  |  |            | 35,680,798 |                 |  |  | 15,464,605 | 
|Robert L. Hunt II |  |            | 33,615,555 |                 |  |  | 17,529,848 | 
|James R. Ukropina |  |            | 33,555,507 |                 |  |  | 17,589,896 | 

In addition, the stockholders voted to ratify the
appointment of Ernst & Young LLP as IndyMac Bancorps
independent public accountants for the year ending
December 31, 2003. The votes cast in this regard were as
follows:

|        |  |            |            | 
|------- |  | ---------- | ---------- | 
|        |  | No. Of    
|        |  | Votes Cast
|        |  |           
|For     |  |            | 30,153,315 | 
|Against |  |            | 20,663,271 | 
|Abstain |  |            | 328,817    | 




ITEM 6.     EXHIBITS
AND REPORTS ON FORM 8-K

(a) Exhibits

|     |  |                                                                                                                                                          
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | IndyMac Bancorp, Inc. Director Emeritus Plan
    effective as of April 30, 2003.                                                                         
|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.
|99.1 |  | IndyMac Bancorp, Inc. Earnings Press Release
    dated August 1, 2003.                                                                                   

(b) Reports on Form 8-K

The Company did not file any reports on
Form 8-K during the quarter ended June 30, 2003. A
report on Form 8-K was furnished on May 2, 2003 that
included:

|                    |  |                                                                                                                                                                                 
|------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Item 7.             |  | Financial Statements and Exhibits regarding First
    Quarter 2003 Earnings (Earnings press release dated
    April 30, 2003 and webcast presentation dated
    April 30, 2003).
|Item 9 and Item 12. |  | Regulation FD Disclosure regarding press
    release and webcast presentation.                                                                                                  

57



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) 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 August 1, 2003 for the three months
ended June 30, 2003.



| |                      
| | ---------------------
| | INDYMAC BANCORP, INC.



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

58