##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    June 30, 2007oro

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

95-3983415(State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification No.)888 East Walnut
    Street,

91101-7211Pasadena, California

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




---



##### 



FORM 10-Q
    QUARTERLY REPORT
    For the Quarter Ended June 30, 2007
    TABLE OF CONTENTS
   
 PagePART I.
    FINANCIAL INFORMATIONForward-Looking
    Statements


3Item 2.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations


3Overview


3Selected
    Consolidated Financial Highlights


5Summary of Business
    Segment Results


8Consolidated Risk
    Management Discussion


31Expenses


49Prospective Trends
    and Future Outlook


50Off-Balance Sheet
    Arrangements


50Aggregate
    Contractual Obligations


51Critical Accounting
    Policies and Judgments


51Regulatory
    Update


51Other
    Considerations


51Appendix A:
    Additional Quantitative Disclosures


52Item 3.
    Quantitative and Qualitative Disclosures About Market
    Risk


69Item 4.
    Controls and Procedures


69Item 1.
    Financial Statements (Unaudited)


70Consolidated
    Balance Sheets


70Consolidated
    Statements of Earnings


71Consolidated
    Statements of Shareholders Equity and Comprehensive
    Income


72Consolidated
    Statements of Cash Flows


73Notes to
    Consolidated Financial Statements


74PART II.
    OTHER INFORMATIONItem 1.
    Legal Proceedings


79Item 1A.
    Risk Factors


79Item 2.
    Unregistered Sales of Equity Securities and Use of
    Proceeds


80Item 4.
    Submission of Matters to a Vote of Security
    Holders


80Item 6.
    Exhibits


81EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   2




---



##### Table of Contents



PART I.
    FINANCIAL INFORMATION FORWARD-LOOKING
    STATEMENTS



Certain statements contained in this
    Form 10-Q
    may be deemed to be forward-looking statements within the
    meaning of the federal securities laws. The words
    anticipate, believe,
    estimate, expect, project,
    plan, forecast, intend,
    goal, target, and similar expressions
    identify forward-looking statements that are inherently subject
    to risks and uncertainties, many of which cannot be predicted or
    quantified. Actual results and the timing of certain events
    could differ materially from those projected in or contemplated
    by the forward-looking statements due to a number of factors,
    including, the effect of economic and market conditions
    including industry volumes and margins; the level and volatility
    of interest rates; the Companys hedging strategies, hedge
    effectiveness and asset and liability management; the accuracy
    of subjective estimates used in determining the fair value of
    financial assets of Indymac; the credit risks with respect to
    our loans and other financial assets; the actions undertaken by
    both current and potential new competitors; the availability of
    funds from Indymacs lenders and from loan sales and
    securitizations to fund mortgage loan originations and portfolio
    investments; the execution of Indymacs growth plans and
    ability to gain market share in a significant market transition;
    the impact of disruptions triggered by natural disasters; the
    impact of current, pending or future legislation, regulations or
    litigation; and other risk factors described in the reports that
    Indymac files with the Securities and Exchange Commission,
    including its Annual Report on
    Form 10-K,
    its Quarterly Reports on
    Form 10-Q,
    and its reports on
    Form 8-K.
    For further information on our risk factors, please refer to
    Risk Factors on pages 72 to 80 in the Companys
    annual report on
    Form 10-K
    for the year ended December 31, 2006 (2006
    10-K).



References to Indymac Bancorp or the Parent
    Company refer to the parent company alone, while
    references to Indymac, the Company, or
    we refer to the parent company 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, 2007.  ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS OVERVIEW



Indymacs hybrid business model combines the best elements
    of mortgage banking and thrift investing. Mortgage banking
    involves the origination, securitization and sale of mortgage
    loans and related assets, and the servicing of those loans. The
    revenues from mortgage banking consist primarily of gains on the
    sale of loans, fees earned from origination, interest income
    earned while the loans are held for sale and servicing fees. On
    the thrift side, we generate core spread income from our
    investment portfolio of prime single-family residential
    (SFR) mortgage loans, home equity loans, consumer
    and builder construction loans and mortgage-backed securities
    (MBS).



As a result of the quick asset turn times associated with
    mortgage banking, it is less capital intensive than thrift
    investing and generally offers higher returns on invested
    capital. When demand for mortgages and related secondary
    products is high, more capital can be deployed in this segment.
    Thrift investing requires more capital than mortgage banking and
    generates correspondingly lower returns on invested capital.
    However, the returns generally tend to be more stable and less
    cyclical than those from mortgage banking. We allocate more
    capital to the thrift segment when we believe the secondary
    market is under-valuing returns on mortgage-related assets. The
    ability to deploy capital into the segment with the best
    opportunities at any given time allows us to focus on strong
    shareholder returns throughout the interest rate cycle.

3




---



##### Table of Contents



1
    1
 4




---



##### Table of Contents



SELECTED
    CONSOLIDATED FINANCIAL HIGHLIGHTS



The following highlights the Companys consolidated
    financial condition and results of operations for the periods
    indicated: Three Months EndedJune 30,


March 31,


December 31,


September 30,


June 30,2007


2007


2006


2006


2006(Dollars in millions, except per share data)Balance Sheet Information (at
    period end)(1)Cash and cash equivalents

$
618


$
577


$
542


$
521


$
165Securities (trading and available
    for sale)


5,608



5,253



5,443



4,950



4,890Loans held for sale


11,762



10,511



9,468



8,341



6,493Loans held for investment


8,648



8,988



10,177



10,030



8,773Allowance for loan losses


(77
)


(68
)


(62
)


(61
)


(58
)Mortgage servicing rights


2,387



2,053



1,822



1,631



1,599Other assets


2,713



2,380



2,105



1,973



1,894Total Assets


31,659



29,694



29,495



27,385



23,756Deposits


11,747



11,452



10,898



10,111



9,352Advances from Federal Home Loan Bank


10,873



10,350



10,413



9,333



7,070Other borrowings


4,527



4,313



4,637



4,595



4,165Other liabilities and preferred
    stock in subsidiary


2,462



1,525



1,519



1,409



1,366Total Liabilities and Preferred
    Stock in Subsidiary


29,609



27,639



27,467



25,447



21,952Shareholders
    Equity


2,050



2,055



2,028



1,938



1,804Income Statement
    Information(1)Net interest income

$
149


$
135


$
133


$
137


$
130Provision for loan losses


17



11



9



5



2Gain on sale of loans


101



118



165



160



202Service fee income


86



49



22



21



27(Loss) gain on MBS


(46
)


(5
)


(4
)


19



8Fee and other income


25



16



13



14



12Net revenues


298



302



320



346



377Operating expenses


224



216



211



203



204Net earnings


45



52



72



86



105Other Operating DataSFR mortgage loan production

$
22,505


$
25,569


$
25,946


$
23,968


$
20,060Total loan production(2)


23,023



25,930



26,328



24,439



20,591Mortgage industry market share(3)


3.07
%


3.90
%


3.63
%


3.32
%


2.67
%Pipeline of SFR mortgage loans in
    process


13,376



16,112



11,821



14,556



12,527Loans sold


20,194



24,537



23,417



19,508



19,415Loans sold/SFR mortgage loan
    production


90
%


96
%


90
%


81
%


97
%SFR mortgage loans serviced for
    others (at period end)(4)


167,710



156,144



139,817



124,395



109,989Total SFR mortgage loans serviced
    (at period end)


183,578



171,955



155,656



139,022



122,112Average full-time equivalent
    employees


9,431



8,755



8,477



8,186



7,861Per Share DataBasic earnings per share

$
0.62


$
0.72


$
1.02


$
1.25


$
1.57Diluted earnings per share


0.60



0.70



0.97



1.19



1.49Dividends declared per share


0.50



0.50



0.50



0.48



0.46Dividend payout ratio(5)


83
%


71
%


52
%


40
%


31
%Book value per share (at period end)


27.83



27.93



27.78



27.35



26.29Closing price per share (at period
    end)


29.17



32.05



45.16



41.16



45.85Average Common Shares (in
    thousands):Basic


72,412



72,297



71,059



68,866



66,483Diluted


73,976



74,305



74,443



72,286



70,213Performance RatiosReturn on average equity
    (annualized)


8.62
%


10.45
%


14.56
%


18.27
%


24.09
%Return on average assets
    (annualized)


0.50
%


0.60
%


0.85
%


1.17
%


1.51
%Net interest income to pre-tax
    income after minority interest and dividends declared on
    preferred stock on subsidiary


203.61
%


157.24
%


122.52
%


95.97
%


75.40
%Net interest margin, consolidated


1.92
%


1.77
%


1.76
%


2.13
%


2.12
%Net interest margin, thrift(6)


2.29
%


2.11
%


2.09
%


2.50
%


2.43
%Mortgage banking revenue
    (MBR) margin on loans sold(7)


0.80
%


0.68
%


0.91
%


1.03
%


1.23
%Efficiency ratio(8)


71
%


69
%


64
%


58
%


54
%Operating expenses to total loan
    production


0.97
%


0.83
%


0.80
%


0.83
%


0.99
%Balance Sheet and Asset Quality
    RatiosAverage interest-earning assets

$
31,255


$
31,030


$
29,868


$
25,507


$
24,681Average assets


35,837



35,341



33,765



29,140



27,770Average equity


2,078



2,033



1,969



1,871



1,742Debt to equity ratio(9)


13.2:1



12.7:1



12.8:1



12.4:1



11.4:1Core capital ratio(10)


8.10
%


7.41
%


7.39
%


7.60
%


8.24
%Risk-based capital ratio(10)


12.09
%


11.28
%


11.72
%


11.62
%


11.97
%Non-performing assets to total
    assets


1.63
%


1.09
%


0.63
%


0.51
%


0.49
%Allowance for loan losses to total
    loans held for investment


0.89
%


0.75
%


0.61
%


0.61
%


0.66
%Allowance for loan losses to
    non-performing loans held for investment


36.07
%


44.11
%


57.51
%


77.43
%


90.61
%     (1)
    
    The items under the balance sheet and income statement sections
    are rounded individually and therefore may not necessarily add
    to the total. 5




---



##### Table of Contents



(2)
    
    Includes newly originated commitments on builder construction
    loans as well as commercial real estate loan production, which
    started in March 2007.(3)
    
    Our market share is calculated based on our total SFR mortgage
    loan production, both purchased (correspondent and conduit) and
    originated (retail and wholesale), in all channels (the
    numerator) divided by the Mortgage Bankers Association
    (MBA) July 12, 2007 Mortgage Finance Long-Term
    Forecast estimate of the overall mortgage market (the
    denominator). Our market share calculation is consistent with
    that of our mortgage banking peers. It is important to note that
    these industry calculations cause purchased mortgages to be
    counted more than once, i.e., first when they are originated and
    again by the purchasers (through correspondent and conduit
    channels) of the mortgages. Therefore, our market share
    calculation may not be mathematically precise, but it is
    consistent with industry calculations, which provide investors
    with a good view of our relative standing compared to the other
    top mortgage lending peers.(4)
    
    SFR mortgage loans serviced for others represent the unpaid
    principal balance on loans sold with servicing retained by
    Indymac. Total SFR mortgage loans serviced includes mortgage
    loans serviced for others and mortgage loans owned by and
    serviced for Indymac.(5)
    
    Dividends declared per common share as a percentage of diluted
    earnings per share.(6)
    
    Net interest margin, thrift, represents the combined margin from
    thrift, elimination and other, and corporate overhead.(7)
    
    Mortgage banking revenue margin is calculated using the sum of
    consolidated gain on sale of loans and the net interest income
    earned on loans held for sale by our mortgage banking production
    divisions divided by total loans sold.(8)
    
    Defined as operating expenses divided by net revenues, excluding
    provision for loan losses.(9)
    
    Debt includes deposits. Preferred stock in subsidiary is
    excluded from the calculation.(10)
    
    Ratio is for Indymac Bank and excludes unencumbered cash at the
    Parent Company available for investment in Indymac Bank.
    Risk-based capital ratio is calculated based on the regulatory
    standard risk weighting adjusted for the additional risk
    weightings for subprime loans.  NARRATIVE
    SUMMARY OF CONSOLIDATED FINANCIAL RESULTS
  Three
    Months ended June 30, 2007 Compared to Three Months ended
    June 30, 2006
     6




---



##### Table of Contents



7




---



##### Table of Contents



Six
    Months ended June 30, 2007 Compared to Six Months ended
    June 30, 2006
      10-year
       SUMMARY
    OF BUSINESS SEGMENT RESULTS



Holding managers accountable for growing profits and earning
    attractive returns on capital is a key component of our
    meritocracy culture. Accordingly, we have developed a detailed
    reporting process that computes net income and ROE for our key
    business segments each reporting period and uses the results to
    evaluate our managers performance and determine their
    incentive compensation. In addition, we use the results to
    evaluate the performance and prospects of our divisions and
    adjust our capital allocations to those that earn the best
    returns for our shareholders.



We predominantly use Generally Accepted Accounting Principles
    (GAAP) to compute each divisions financial
    results as if it were a stand-alone entity. Consistent with this
    approach, borrowed funds and their interest cost are allocated
    based on the funds actually used by the Company to fund the
    divisions assets and capital is allocated based on
    regulatory capital rules for the specific assets of each
    segment. Additionally, transactions between divisions are
    reflected at arms-length in these financial results and
    intercompany profits are eliminated in consolidation. We do not
    allocate fixed corporate and business unit overhead costs to our
    profit center divisions, because the methodologies to do so are
    arbitrary and distort each divisions marginal contribution
    to our profits. However, the cost of these overhead activities
    is included in the following tables so they reconcile to our

8




---



##### Table of Contents



9




---



##### Table of Contents



TotalMortgage





Eliminations


Operating


Corporate


TotalBanking


Thrift


& Other(1)


Results


Overhead


Company(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income

$
54,286


$
71,699


$
26,506


$
152,491


$
(3,247
)

$
149,244Provision for loan losses






(17,204
)






(17,204
)






(17,204
)Gain (loss) on sale of loans


116,962



7,679



(23,611
)


101,030







101,030Service fee income


92,709



476



(7,567
)


85,618







85,618Gain (loss) on sale of securities


(26,392
)


(20,698
)


743



(46,347
)






(46,347
)Other income


12,751



11,280



775



24,806



607



25,413Net revenues (expense)


250,316



53,232



(3,154
)


300,394



(2,640
)


297,754Operating expenses


209,369



32,579



16,013



257,961



27,751



285,712Deferral of expenses under
    SFAS 91


(56,464
)


(4,793
)






(61,257
)






(61,257
)Pretax income (loss)


97,411



25,446



(19,167
)


103,690



(30,391
)


73,299Net income (loss)

$
59,078


$
15,495


$
(11,426
)

$
63,147


$
(18,508
)

$
44,639Relevant Financial and
    Performance DataAverage interest-earning assets

$
14,634,017


$
16,276,519


$
(92,737
)

$
30,817,799


$
437,229


$
31,255,028Allocated capital


1,100,429



897,521



1,984



1,999,934



77,640



2,077,574Loans produced


21,626,275



1,396,865







23,023,140







23,023,140Loans sold


20,496,742



1,204,928



(1,508,093
)


20,193,577







20,193,577MBR Margin


0.87
%


0.64
%


N/A



N/A



N/A



0.80
%ROE


22
%


7
%


N/A



13
%


N/A



9
%Net interest margin


N/A



1.77
%


N/A



1.98
%


N/A



1.92
%Net interest margin, thrift


N/A



1.77
%


N/A



N/A



N/A



2.29
%Average FTE


7,145



660



326



8,131



1,300



9,431Three Months Ended June 30,
    2006Operating ResultsNet interest income

$
37,897


$
76,780


$
17,432


$
132,109


$
(1,955
)

$
130,154Provision for loan losses






(2,230
)






(2,230
)






(2,230
)Gain (loss) on sale of loans


196,924



17,005



(12,270
)


201,659







201,659Service fee income


35,050



288



(8,091
)


27,247







27,247Gain (loss) on sale of securities


6,832



(1,577
)


3,003



8,258







8,258Other income


2,431



9,445



(150
)


11,726



276



12,002Net revenues (expense)


279,134



99,711



(76
)


378,769



(1,679
)


377,090Operating expenses


181,458



33,282



12,005



226,745



43,901



270,646Deferral of expenses under
    SFAS 91


(61,295
)


(4,599
)


(281
)


(66,175
)






(66,175
)Pretax income (loss)


158,971



71,028



(11,800
)


218,199



(45,580
)


172,619Net income (loss)

$
96,651


$
43,258


$
(7,492
)

$
132,417


$
(27,758
)

$
104,659Relevant Financial and
    Performance DataAverage interest-earning assets

$
9,428,400


$
14,498,089


$
(90,914
)

$
23,835,575


$
845,002


$
24,680,577Allocated capital


786,573



776,126



2,154



1,564,853



177,384



1,742,237Loans produced


19,252,719



1,337,863







20,590,582







20,590,582Loans sold


20,180,744



1,269,497



(2,035,077
)


19,415,164







19,415,164MBR Margin


1.16
%


1.34
%


N/A



N/A



N/A



1.23
%ROE


49
%


22
%


N/A



34
%


N/A



24
%Net interest margin


N/A



2.12
%


N/A



2.22
%


N/A



2.12
%Net interest margin, thrift


N/A



2.12
%


N/A



N/A



N/A



2.43
%Average FTE


5,655



655



312



6,622



1,239



7,861Quarter to Quarter
    Comparison% change in net income


(39
)%


(64
)%


(53
)%


(52
)%


33
%


(57
)%% change in capital


40
%


16
%


(8
)%


28
%


(56
)%


19
%     (1)
    
    Included are eliminations, deposits, and treasury items, the
    details of which are provided on page 30. 10




---



##### Table of Contents



MORTGAGE
    BANKING SEGMENT
           11




---



##### Table of Contents



ConsumerMortgage


Commercial


TotalProduction


Mortgage


Banking


Mortgage


MortgageDivisions


Servicing


O/H(1)


Banking


Banking(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income

$
61,347


$
(7,414
)

$
319


$
34


$
54,286Provision for loan losses


















Gain (loss) on sale of loans


96,290



20,449







223



116,962Service fee income


10,815



81,894











92,709Gain (loss) on sale of securities






(26,392
)










(26,392
)Other income


7,194



4,590



941



26



12,751Net revenues (expense)


175,646



73,127



1,260



283



250,316Operating expenses


164,390



25,043



17,820



2,116



209,369Deferral of expenses under
    SFAS 91


(52,050
)


(4,310
)






(104
)


(56,464
)Pretax income (loss)


63,306



52,394



(16,560
)


(1,729
)


97,411Net income (loss)

$
38,308


$
31,908


$
(10,085
)

$
(1,053
)

$
59,078Relevant Financial and
    Performance DataAverage interest-earning assets

$
13,517,736


$
1,100,083


$
2,470


$
13,728


$
14,634,017Allocated capital


735,268



348,360



16,196



605



1,100,429Loans produced


20,091,316



1,490,172







44,787



21,626,275Loans sold


19,253,790



1,241,952







1,000



20,496,742MBR Margin


0.82
%


1.65
%


N/A



N/A



0.87
%ROE


21
%


37
%


N/A



(698
)%


22
%Net interest margin


1.82
%


N/A



N/A



0.99
%


N/AAverage FTE


5,386



291



1,440



28



7,145Three Months Ended June 30,
    2006Operating ResultsNet interest income

$
37,650


$
(221
)

$
468


$



$
37,897Provision for loan losses


















Gain (loss) on sale of loans


191,333



5,591











196,924Service fee income


4,650



30,400











35,050Gain (loss) on sale of securities






6,832











6,832Other income


484



1,222



725







2,431Net revenues (expense)


234,117



43,824



1,193







279,134Operating expenses


152,837



13,308



15,313







181,458Deferral of expenses under
    SFAS 91


(59,608
)


(1,687
)










(61,295
)Pretax income (loss)


140,888



32,203



(14,120
)






158,971Net income (loss)

$
85,638


$
19,612


$
(8,599
)

$



$
96,651Relevant Financial and
    Performance DataAverage interest-earning assets

$
8,851,454


$
573,655


$
3,291


$



$
9,428,400Allocated capital


521,875



253,768



10,930







786,573Loans produced


18,712,491



540,228











19,252,719Loans sold


19,743,413



437,331











20,180,744MBR Margin


1.16
%


1.28
%


N/A



N/A



1.16
%ROE


66
%


31
%


N/A



N/A



49
%Net interest margin


1.71
%


N/A



N/A



N/A



N/AAverage FTE


4,405



183



1,067







5,655Quarter to Quarter
    Comparison% change in net income


(55
)%


63
%


(17
)%


N/A



(39
)%% change in equity


41
%


37
%


48
%


N/A



40
%     (1)
    
    Included production division overhead, servicing overhead and
    secondary marketing overhead of $3.7 million,
    $3.4 million and $3.0 million, respectively, for the
    second quarter of 2007. For the second quarter of 2006, the
    production division overhead, servicing overhead and secondary
    marketing overhead were $3.7 million, $2.4 million and
    $2.5 million, respectively. 12




---



##### Table of Contents



PRODUCTION
    DIVISIONS
      ®
   13




---



##### Table of Contents



Mortgage Professionals GroupTotal


FinancialMortgage


Freedom


TotalConsumer














Professionals


(Reverse


ProductionDirect


Retail


Wholesale


Correspondent


Conduit


Group


Mortgage)


Divisions(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income

$
289


$
975


$
23,567


$
6,000


$
26,162


$
56,704


$
4,354


$
61,347Provision for loan losses






























Gain (loss) on sale of loans


3,519



1,565



62,193



5,989



(22,192
)


47,555



45,216



96,290Service fee income


























10,815



10,815Gain (loss) on securities






























Other income


161



4,116



2,898







(111
)


6,903



130



7,194Net revenues (expense)


3,969



6,656



88,658



11,989



3,859



111,162



60,515



175,646Operating expenses


7,331



14,978



85,936



12,022



7,543



120,479



36,580



164,390Deferral of expenses under
    SFAS 91


(2,776
)


(638
)


(35,857
)


(5,423
)






(41,918
)


(7,356
)


(52,050
)Pre-tax income (loss)


(586
)


(7,684
)


38,579



5,390



(3,684
)


32,601



31,291



63,306Net income (loss)

$
(357
)

$
(4,680
)

$
23,495


$
3,282


$
(2,244
)

$
19,853


$
18,812


$
38,308Relevant Financial and
    Performance DataAverage interest-earning assets

$
130,510


$
89,907



5,237,671



1,347,963



5,871,693



12,547,234



839,992



13,517,736Allocated capital


6,302



9,271



260,417



68,811



258,857



597,356



131,610



735,268Loans produced


288,610



376,406



10,238,487



2,649,220



5,280,941



18,545,054



1,257,652



20,091,316Loans sold


302,384



177,872



9,758,231



2,633,810



5,019,690



17,589,603



1,361,803



19,253,790MBR Margin


1.26
%


1.43
%


0.88
%


0.46
%


0.08
%


0.59
%


3.64
%


0.82
%ROE


(23
)%


(202
)%


36
%


19
%


(3
)%


13
%


57
%


21
%Net interest margin


0.89
%


4.35
%


1.80
%


1.79
%


1.79
%


1.81
%


2.08
%


1.82
%Average FTE


265



532



2,755



272



166



3,725



1,396



5,386Three Months Ended June 30,
    2006Operating ResultsNet interest income

$
647


$
1


$
14,462


$
3,375


$
17,576


$
35,414


$
1,589


$
37,650Provision for loan losses






























Gain (loss) on sale of loans


10,357



4



107,401



16,482



18,918



142,805



38,171



191,333Service fee income


























4,650



4,650Gain (loss) on securities






























Other income


127



(1
)


1







(9
)


(9
)


366



484Net revenues (expense)


11,131



4



121,864



19,857



36,485



178,210



44,776



234,117Operating expenses


16,231



617



81,713



12,862



6,750



101,942



34,664



152,837Deferral of expenses under
    SFAS 91


(6,203
)


(2
)


(38,757
)


(6,197
)






(44,956
)


(8,449
)


(59,608
)Pre-tax income (loss)


1,103



(611
)


78,908



13,192



29,735



121,224



18,561



140,888Net income (loss)

$
672


$
(372
)

$
48,055


$
8,034


$
18,109


$
73,826


$
11,140


$
85,638Relevant Financial and
    Performance DataAverage interest-earning assets

$
224,931


$
122



3,680,523



919,027



3,603,890



8,203,562



422,961



8,851,454Allocated capital


12,872



6



212,691



53,252



168,293



434,242



74,761



521,875Loans produced


551,455



800



8,824,662



2,527,672



5,471,341



16,824,475



1,336,561



18,712,491Loans sold


589,577







9,296,911



2,601,936



6,054,148



17,952,995



1,200,841



19,743,413MBR Margin


1.87
%


N/A



1.31
%


0.76
%


0.60
%


0.99
%


3.31
%


1.16
%ROE


21
%


N/A



91
%


61
%


43
%


68
%


60
%


66
%Net interest margin


1.15
%


N/A



1.58
%


1.47
%


1.96
%


1.73
%


1.51
%


1.71
%Average FTE


369



10



2,382



229



146



2,767



1,269



4,405Quarter to Quarter
    Comparison% change in net income


(153
)%


N/M



(51
)%


(59
)%


(112
)%


(73
)%


69
%


(55
)%% change in capital


(51
)%


N/A



22
%


29
%


54
%


38
%


76
%


41
%  14




---



##### Table of Contents



Three Months EndedJune 30,


June 30,


Percent


March 31,


Percent2007


2006


Change


2007


ChangeKey Production
    Drivers:Active customers(1)


9,187



7,472



23
%


8,290



11
%Sales personnel


1,241



952



30
%


1,182



5
%Number of regional offices


16



15



7
%


16



     (1)
    
    Active customers are defined as customers who funded at least
    one loan during the most recent
    90-day
    period.  Loan
    Production
      ramp-up
 15




---



##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,


Percent


March 31,


Percent


June 30,


June 30,


Percent2007


2006


Change


2007


Change


2007


2006


Change(Dollars in millions)Production by
    Channel:SFR mortgage loan
    production:Mortgage professionals group:Wholesale(1)

$
10,238


$
8,825



16
%

$
10,632



(4
)%

$
20,870


$
17,606



19
%Correspondent


2,649



2,528



5
%


3,024



(12
)%


5,673



4,804



18
%Conduit


5,281



5,471



(3
)%


8,368



(37
)%


13,649



11,607



18
%Retail


376







N/A



49



667
%


425







N/AConsumer direct


289



552



(48
)%


320



(10
)%


609



1,077



(43
)%Financial Freedom


1,258



1,337



(6
)%


1,221



3
%


2,479



2,455



1
%Servicing retention


1,490



540



176
%


1,118



33
%


2,608



967



170
%Home equity division(2)


7



33



(79
)%


25



(72
)%


32



63



(49
)%Consumer construction Division(2)


917



774



18
%


812



13
%


1,729



1,458



19
%Total SFR mortgage loan production


22,505



20,060



12
%


25,569



(12
)%


48,074



40,037



20
%Commercial loan
    production:Commercial mortgage banking


45







N/A



1



N/M



46







N/AHomebuilder division(2)


473



531



(11
)%


360



31
%


833



894



(7
)%Total production

$
23,023


$
20,591



12
%

$
25,930



(11
)%

$
48,953


$
40,931



20
%Total pipeline at period
    End

$
13,376


$
12,527



7
%

$
16,112



(17
)%     (1)
    
    Wholesale channel includes $1.4 billion, $712 million,
    and $1.3 billion of production from wholesale inside sales
    for the quarters ended June 30, 2007 and 2006 and
    March 31, 2007, respectively and $2.7 billion, and
    $1.3 billion of production from wholesale inside sales for
    the six months ended June 30, 2007 and 2006, respectively.
    The wholesale inside sales force focuses on small and
    geographically remote mortgage brokers through centralized
    in-house sales personnel instead of field sales personnel.(2)
    
    The amounts of HELOCs, consumer construction and builder
    construction loans originated by these channels represent
    commitments. 16




---



##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,


Percent


March 31,


Percent


June 30,


June 30,


Percent2007


2006


Change


2007


Change


2007


2006


Change(Dollars in millions)Production by Product
    Type:Standard first mortgage products:Prime

$
18,536


$
15,334



21
%

$
20,719



(11
)%

$
39,255


$
31,062



26
%Subprime


751



505



49
%


1,084



(31
)%


1,835



1,059



73
%Total standard first mortgage
    products (S&P evaluated)


19,287



15,839



22
%


21,803



(12
)%


41,090



32,121



28
%Specialty consumer home mortgage
    products:Home equity line of
    credit(1)/Seconds


876



1,860



(53
)%


1,703



(49
)%


2,579



3,503



(26
)%Reverse mortgages


1,258



1,337



(6
)%


1,221



3
%


2,479



2,455



1
%Consumer construction(1)


1,084



1,024



6
%


842



29
%


1,926



1,958



(2
)%Subtotal SFR mortgage production


22,505



20,060



12
%


25,569



(12
)%


48,074



40,037



20
%Commercial loan products:Commercial real estate


45







N/A



1



N/M



46







N/ABuilder construction commitments(1)


473



531



(11
)%


360



31
%


833



894



(7
)%Total production

$
23,023


$
20,591



12
%

$
25,930



(11
)%

$
48,953


$
40,931



20
%Total S&P lifetime loss
    estimate(2)


0.63
%


0.84
%






0.85
%






0.75
%


0.78
%     (1)
    
    Amounts represent total commitments.(2)
    
    While our production is evaluated using the Standard &
    Poors (S&P) Levels model, the data are
    not audited or endorsed by S&P. S&P evaluated
    production excludes second liens, home equity lines of credit
    (HELOC), reverse mortgages, and construction loans.   17




---



##### Table of Contents



Loan
    Sales
    Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in millions)Distribution of Loan Sales by
    Channel:Sales of government-sponsored
    enterprises (GSEs) equivalent loans


40
%


18
%


31
%


35
%


19
%Private-label securitizations


46
%


46
%


30
%


37
%


42
%Whole loan sales, servicing
    retained


13
%


33
%


36
%


26
%


35
%Whole loan sales, servicing
    released






2
%


1
%


1
%


2
%Subtotal sales


99
%


99
%


98
%


99
%


98
%Investment portfolio acquisitions


1
%


1
%


2
%


1
%


2
%Total loan distribution percentage


100
%


100
%


100
%


100
%


100
%Total loan distribution

$
20,378


$
19,631


$
24,933


$
45,311


$
36,951        18




---



##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,


Percent


March 31,


Percent


June 30,


June 30,


Percent2007


2006


Change


2007


Change


2007


2006


Change(Dollars in millions)Total loans sold

$
20,194


$
19,415



4
%

$
24,537



(18
)%

$
44,731


$
36,123



24
%MBR margin after production hedging


1.31
%


1.67
%


(22
)%


1.11
%


18
%


1.20
%


1.55
%


(23
)%MBR margin after credit costs


1.01
%


1.48
%


(32
)%


0.88
%


14
%


0.94
%


1.41
%


(34
)%Net MBR margin


0.80
%


1.23
%


(34
)%


0.68
%


18
%


0.74
%


1.17
%


(37
)%     MORTGAGE
    SERVICING DIVISION
         19




---



##### Table of Contents



Mortgage





TotalServicing


Customer


MortgageRights


Retention


Servicing(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income (expense)

$
(10,525
)

$
3,111


$
(7,414
)Provision for loan losses










Gain (loss) on sale of loans


1,321



19,128



20,449Service fee income


81,894







81,894Gain (loss) on sale of securities


(26,392
)






(26,392
)Other income


2,655



1,935



4,590Net revenues (expense)


48,953



24,174



73,127Operating expenses


12,222



12,821



25,043Deferral of expenses under
    SFAS 91






(4,310
)


(4,310
)Pre-tax income (loss)


36,731



15,663



52,394Net income (loss)

$
22,369


$
9,539


$
31,908Relevant Financial and
    Performance DataAverage interest-earning assets

$
233,838


$
866,245


$
1,100,083Allocated capital


309,189



39,171



348,360Loans produced






1,490,172



1,490,172Loans sold






1,241,952



1,241,952MBR Margin


N/A



1.54
%


1.65
%ROE


29
%


98
%


37
%Net interest margin


N/A



1.44
%


N/AAverage FTE


92



199



291Three Months Ended June 30,
    2006Operating ResultsNet interest income (expense)

$
(1,194
)

$
973


$
(221
)Provision for loan losses










Gain (loss) on sale of loans


(825
)


6,416



5,591Service fee income


30,400







30,400Gain (loss) on sale of securities


6,832







6,832Other income


25



1,197



1,222Net revenues (expense)


35,238



8,586



43,824Operating expenses


6,928



6,380



13,308Deferral of expenses under
    SFAS 91






(1,687
)


(1,687
)Pre-tax income (loss)


28,310



3,893



32,203Net income (loss)

$
17,241


$
2,371


$
19,612Relevant Financial and
    Performance DataAverage interest-earning assets

$
311,352


$
262,303


$
573,655Allocated capital


239,750



14,018



253,768Loans produced






540,228



540,228Loans sold


5,778



431,553



437,331MBR Margin


N/A



1.49
%


1.28
%ROE


29
%


68
%


31
%Net interest margin


N/A



N/A



N/AAverage FTE


85



98



183Quarter to Quarter
    Comparison% change in net income


30
%


302
%


63
%% change in capital


29
%


179
%


37
%    20




---



##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in millions)Unpaid principal balance at
    beginning of period

$
156,144


$
96,512


$
139,817


$
139,817


$
84,495Additions


20,580



19,422



24,690



45,270



36,113Clean-up
    calls exercised


(153
)


(31
)






(153
)


(31
)Loan payments and prepayments


(8,861
)


(5,914
)


(8,363
)


(17,224
)


(10,588
)Unpaid principal balance at end of
    period

$
167,710


$
109,989


$
156,144


$
167,710


$
109,989     June 30,


June 30,


March 31,2007


2006


2007By Product Type:Fixed rate mortgages


36
%


35
%


35
%Intermediate term fixed-rate loans


34
%


28
%


32
%Pay option ARMs


18
%


25
%


21
%Reverse mortgages (all ARMs)


9
%


9
%


9
%HELOCs


2
%


2
%


2
%Other


1
%


1
%


1
%Total


100
%


100
%


100
%Additional
    Information(1)Weighted average FICO


704



703



703Weighted average original LTV(2)


72
%


72
%


72
%Average original loan size (in
    thousands)


239



225



230Percent of portfolio with
    prepayment penalty


39
%


40
%


41
%Portfolio delinquency (% of unpaid
    principal balance)(3)


5.23
%


3.96
%


4.26
%By Geographic Distribution:California


43
%


42
%


43
%Florida


8
%


8
%


8
%New York


8
%


8
%


8
%New Jersey


4
%


4
%


4
%Virginia


4
%


4
%


4
%Other


33
%


34
%


33
%Total


100
%


100
%


100
%     (1)
    
    Portfolio delinquency is calculated for the entire servicing
    portfolio. All other information presented excludes reverse
    mortgages.(2)
    
    Combined loan-to-value ratio for loans in the second lien
    position is used to calculate weighted average original
    loan-to-value ratio for the portfolio.(3)
    
    Delinquency is defined as 30 days or more past the due date. 21




---



##### Table of Contents



THRIFT
    SEGMENT
        ThriftNon-Investment


TotalInvestment


Grade and


Mortgage-


SFR


Home


ConsumerGrade


Residual


Backed


Mortgage


Equity


Construction


Homebuilder


Warehouse


Discontinued


TotalSecurities


Securities


Securities


Loans


Division


Division


Division


Lending


Products


Thrift(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income

$
7,650


$
14,586


$
22,236


$
10,479


$
6,293


$
14,985


$
15,470


$
1,778


$
458


$
71,699Provision for loan losses














(13,800
)


(490
)


(1,693
)


(1,000
)


(96
)


(125
)


(17,204
)Gain (loss) on sale of loans














3,421



(4,125
)


8,383















7,679Service fee income


















476



















476Gain (loss) on securities


(1,879
)


(16,292
)


(18,171
)






(2,068
)


(459
)














(20,698
)Other income














460



1,367



8,364



314



775







11,280Net revenues (expense)


5,771



(1,706
)


4,065



560



1,453



29,580



14,784



2,457



333



53,232Operating expenses


334



650



984



2,776



3,812



17,211



6,507



1,104



185



32,579Deferral of expenses under
    SFAS 91


















(74
)


(2,571
)


(2,148
)










(4,793
)Pre-tax income (loss)


5,437



(2,356
)


3,081



(2,216
)


(2,285
)


14,940



10,425



1,353



148



25,446Net income (loss)

$
3,311


$
(1,435
)

$
1,876


$
(1,350
)

$
(1,392
)

$
9,098


$
6,349


$
824


$
90


$
15,495Relevant Financial and
    Performance DataAverage interest-earning assets

$
4,318,907


$
343,315


$
4,662,222


$
5,847,366


$
1,389,106


$
2,804,611


$
1,241,967


$
298,703


$
32,544


$
16,276,519Allocated capital


82,044



210,102



292,146



219,454



108,489



139,491



110,709



24,296



2,936



897,521Loans produced


















6,664



917,223



472,978











1,396,865Loans sold














466,542



119,519



618,867















1,204,928ROE


16
%


(3
)%


3
%


(2
)%


(5
)%


26
%


23
%


14
%


12
%


7
%Net interest margin, thrift.


0.71
%


17.04
%


1.91
%


0.72
%


1.82
%


2.14
%


5.00
%


2.39
%


5.64
%


1.77
%Efficiency ratio


6
%


(38
)%


24
%


19
%


192
%


47
%


28
%


43
%


40
%


39
%Average FTE


2



6



8



12



81



404



125



30







660Three Months Ended June 30,
    2006Operating ResultsNet interest income

$
10,054


$
8,855


$
18,909


$
18,723


$
9,817


$
12,211


$
15,809


$
728


$
583


$
76,780Provision for loan losses














(975
)






(625
)


(250
)






(380
)


(2,230
)Gain (loss) on sale of loans


(122
)






(122
)


765



5,280



11,093











(11
)


17,005Service fee income


















288



















288Gain (loss) on securities


(257
)


3



(254
)






(1,787
)


464















(1,577
)Other income


11







11



429



2,262



5,934



376



433







9,445Net revenues (expense)


9,686



8,858



18,544



18,942



15,860



29,077



15,935



1,161



192



99,711Operating expenses


286



636



922



1,056



5,682



18,413



5,993



1,122



94



33,282Deferral of expenses under
    SFAS 91


















(327
)


(2,309
)


(1,963
)










(4,599
)Pre-tax income (loss)


9,400



8,222



17,622



17,886



10,505



12,973



11,905



39



98



71,028Net income (loss)

$
5,725


$
5,007


$
10,732


$
10,893


$
6,398


$
7,901


$
7,250


$
24


$
60


$
43,258Relevant Financial and
    Performance DataAverage interest-earning assets

$
3,097,846


$
195,856


$
3,293,702


$
5,552,768


$
1,959,586


$
2,478,231


$
1,077,306


$
94,938


$
41,558


$
14,498,089Allocated capital


63,178



102,837



166,015



223,102



148,496



120,104



105,365



9,331



3,713



776,126Loans produced


















32,808



774,060



530,995











1,337,863Loans sold














2,845



615,834



650,818















1,269,497ROE


36
%


20
%


26
%


20
%


17
%


26
%


28
%


1
%


6
%


22
%Net interest margin, thrift.


1.30
%


18.13
%


2.30
%


1.35
%


2.01
%


1.98
%


5.89
%


3.08
%


5.63
%


2.12
%Efficiency ratio


3
%


7
%


5
%


5
%


34
%


54
%


25
%


97
%


16
%


28
%Average FTE


6



7



13



14



77



426



101



24







655Quarter to Quarter
    Comparison% change in net income


(42
)%


(129
)%


(83
)%


(112
)%


(122
)%


15
%


(12
)%


N/M



50
%


(64
)%% change in capital


30
%


104
%


76
%


(2
)%


(27
)%


16
%


5
%


160
%


(21
)%


16
%  22




---



##### Table of Contents



MORTGAGE-BACKED
    SECURITIES
    June 30, 2007


June 30, 2006


December 31, 2006Trading


AFS


Total


Trading


AFS


Total


Trading


AFS


Total(Dollars in thousands)Mortgage banking
    segment:AAA-rated agency securities

$
205,872


$



$
205,872


$



$
3,154


$
3,154


$



$
2,915


$
2,915AAA-rated and agency interest-only
    securities


136,267







136,267



61,528







61,528



66,581







66,581AAA-rated principal-only securities


69,127







69,127



129,951







129,951



38,478







38,478Prepayment penalty and other
    securities


85,187







85,187



78,115







78,115



93,176







93,176Total mortgage banking


496,454







496,454



269,595



3,154



272,748



198,235



2,915



201,150Thrift segment:AAA-rated non-agency securities


74,446



3,957,194



4,031,640



73,434



3,972,977



4,046,411



43,957



4,604,489



4,648,446AAA-rated agency securities


16,148



50,448



66,596







49,547



49,547







62,260



62,260AAA-rated and agency interest-only
    securities














2,845







2,845



6,989







6,989Prepayment penalty and other
    securities


3,426







3,426



1,921







1,921



4,400







4,400Other investment grade securities


121,958



444,627



566,585



27,060



160,885



187,945



29,015



160,238



189,253Other non-investment grade
    securities


144,857



38,466



183,323



35,348



52,696



88,044



41,390



38,784



80,174Non-investment grade residual
    securities


250,700



9,172



259,872



198,292



42,230



240,522



218,745



31,828



250,573Total
    thrift.


611,535



4,499,907



5,111,442



338,900



4,278,335



4,617,235



344,496



4,897,599



5,242,095Total mortgage-backed
    securities

$
1,107,989


$
4,499,907


$
5,607,896


$
608,495


$
4,281,489


$
4,889,983


$
542,731


$
4,900,514


$
5,443,245     (1)
    
    AAA-rated mortgage-backed securities represented 80%, 88% and
    85% of the total portfolio at June 30, 2007 and 2006 and
    December 31, 2006, respectively. These securities had an
    expected weighted average life of 3.5 years, 3.0 years
    and 2.9 years at June 30, 2007 and 2006 and
    December 31, 2006, respectively.  SFR
    MORTGAGE LOANS HELD FOR INVESTMENT
     23




---



##### Table of Contents



June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)SFR mortgage loans held for
    investment (book value)

$
4,743,018


$
5,427,609


$
6,519,340Average loan size


342



290



310Non-performing loans


2.93
%


0.86
%


1.09
%Estimated average life in years(1)


3.0



2.3



2.6Estimated average net duration in
    month(2)


0.3



(0.7
)


(3.5
)Annualized yield


6.33
%


5.74
%


6.01
%Percent of loans with active
    prepayment penalty


37
%


40
%


34
%Fixed-rate mortgages


6
%


6
%


5
%Intermediate term fixed-rate loans


17
%


16
%


15
%Interest-only loans


53
%


51
%


60
%Pay option ARMs


22
%


24
%


18
%Other


2
%


3
%


2
%Additional
    Information:Average FICO score(3)


714



713



716Original average loan-to-value
    ratio


73
%


73
%


73
%Current average loan-to-value
    ratio(4)


63
%


58
%


61
%Geographic distribution of top
    five states:Southern California


34
%


31
%


32
%Northern California


22
%


21
%


20
%Total California


56
%


52
%


52
%Florida


6
%


6
%


6
%New York


4
%


3
%


4
%Virginia


3
%


3
%


3
%Arizona


3
%


3
%


3
%Other


28
%


33
%


32
%Total


100
%


100
%


100
%     (1)
    
    Represents the estimated length of time, on average, the SFR
    loan portfolio will remain outstanding based on our estimates
    for prepayments. 24




---



##### Table of Contents



(2)
    
    Average net duration measures the expected change in the value
    of a financial instrument in response to changes in interest
    rates, taking into consideration the impact of the related
    hedges. The negative net duration implies an increase in value
    as rates rise while the positive net duration implies a decrease
    in value.(3)
    
    FICO scores are the result of a credit scoring system developed
    by Fair Isaacs and Co. and are generally used by lenders to
    evaluate a borrowers credit history. FICO scores of 700 or
    higher are generally considered in the mortgage industry to be
    very high quality borrowers with low risk of default, but in
    general, the secondary market will consider FICO scores of 620
    or higher to be prime.(4)
    
    Current average loan-to-value ratio is estimated based on the
    Office of the Federal Housing Enterprise Oversight House Price
    Index Metropolitan Statistical Area data for the first quarter
    of 2007 on a loan level basis.  HOME
    EQUITY DIVISION
        June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)Outstanding balance (book value)

$
1,147,540


$
759,527


$
656,714Total commitments(1)


2,786,871



1,907,873



2,211,298Average spread over prime


1.29
%


1.26
%


1.39
%Average FICO score


730



734



737Average CLTV ratio(2)


77
%


77
%


77
%   Additional
    Information on HELOC Portfolio
  June 30, 2007Average Loan








30+ DaysOutstanding


Commitment


Average Spread


Average


DelinquencyCLTV

Balance


Balance


Over Prime


FICO


Percentage(Dollars in thousands)96% to 100%

$
102,029


$
92



2.46
%


711



6.23
%91% to 95%


203,540



94



1.95
%


715



1.93
%81% to 90%


375,227



85



1.71
%


712



2.13
%71% to 80%


254,470



147



0.46
%


738



1.01
%70% or less


212,274



149



0.35
%


748



0.78
%Total

$
1,147,540



115



1.29
%


730



1.96
%   25




---



##### Table of Contents



June 30, 2006Average Loan








30+ DaysOutstanding


Commitment


Average Spread


Average


DelinquencyCLTV

Balance


Balance


Over Prime


FICO


Percentage(Dollars in thousands)96% to 100%

$
100,909


$
120



2.11
%


730



1.50
%91% to 95%


86,927



104



2.11
%


714



0.23
%81% to 90%


293,590



91



1.59
%


714



0.68
%71% to 80%


152,513



158



0.46
%


741



0.56
%70% or less


125,588



159



0.20
%


751



0.50
%Total

$
759,527



125



1.26
%


734



0.68
%     (1)
    
    On funded loans.(2)
    
    The CLTV combines the loan-to-value on both the first mortgage
    loan and the HELOC.  CONSUMER
    CONSTRUCTION DIVISION
     26




---



##### Table of Contents



June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)Portfolio balance (book value)

$
2,498,788


$
2,191,965


$
2,276,133Total commitments


3,899,874



3,578,789



3,600,454Average loan commitment


479



459



474Non-performing loans


1.39
%


0.73
%


1.14
%Fixed-rate loans


48
%


84
%


71
%Adjustable-rate loans


52
%


16
%


29
%Additional
    Information:Average loan-to-value ratio(1)


73
%


72
%


73
%Average FICO score


720



718



718Geographic distribution of top
    five states:Southern California


29
%


29
%


28
%Northern California


13
%


15
%


15
%Total California


42
%


44
%


43
%Florida


8
%


9
%


9
%Washington


4
%


4
%


4
%New York


4
%


4
%


4
%Colorado


3
%


3
%


4
%Other


39
%


36
%


36
%Total


100
%


100
%


100
%     (1)
    
    The average loan-to-value ratio is based on the estimated
    appraised value of the completed project compared to the
    commitment amount at the date indicated.  HOMEBUILDER
    DIVISION
       27




---



##### Table of Contents



June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)Portfolio balance (book value)

$
1,290,470


$
1,068,945


$
1,144,835Total commitments


1,955,541



2,003,745



2,010,727Average loan commitments


9,447



10,602



10,810Percentage of homes under
    construction or completed that are sold


40
%


51
%


37
%Median sales price of homes


427



394



420Non-performing loans


3.10
%


0.00
%


0.78
%Additional
    Information:Average loan-to-value ratio(1)


73
%


71
%


73
%Geographic distribution of top
    five states:Southern California


41
%


37
%


41
%Northern California


26
%


17
%


19
%Total California


67
%


54
%


60
%Florida


9
%


13
%


11
%Illinois


7
%


13
%


9
%Oregon


5
%


6
%


6
%Arizona


3
%


5
%


4
%Other


9
%


9
%


10
%Total


100
%


100
%


100
%     (1)
    
    The average loan-to-value ratio is based on the estimated
    appraised value of the completed project compared to the
    commitment amount at the date indicated.  WAREHOUSE
    LENDING DIVISION
   28




---



##### Table of Contents



June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)Total customers


116



77



107Outstanding balance (book value)

$
262,222


$
121,292


$
246,778Total commitments


841,500



468,000



712,000       ELIMINATIONS &
    OTHER SEGMENT
     29




---



##### Table of Contents



EliminationsInterdivisionInterdivision


HedgeDeposits


Treasury


Loan Sales(1)


Transactions


Other


Total(Dollars in thousands)Three Months Ended
    June 30, 2007Operating ResultsNet interest income

$



$
11,349


$
9,012


$



$
6,145


$
26,506Provision for loan losses






















Gain (loss) on sale of loans










(20,326
)


2,381



(5,666
)


(23,611
)Service fee income














(2,381
)


(5,186
)


(7,567
)Gain (loss) on sale of securities


















743



743Other income


1,104



236











(565
)


775Net revenues (expense)


1,104



11,585



(11,314
)






(4,529
)


(3,154
)Operating expenses


6,607



13,935











(4,529
)


16,013Deferral of expenses under
    SFAS 91






















Pretax income (loss)


(5,503
)


(2,350
)


(11,314
)










(19,167
)Net income (loss)

$
(3,351
)

$
(1,431
)

$
(6,644
)

$



$



$
(11,426
)Three Months Ended
    June 30, 2006Operating ResultsNet interest income

$



$
6,490


$
7,568


$



$
3,374


$
17,432Provision for loan losses






















Gain (loss) on sale of loans










(11,213
)






(1,057
)


(12,270
)Service fee income


















(8,091
)


(8,091
)Gain (loss) on sale of securities


















3,003



3,003Other income


883



180











(1,213
)


(150
)Net revenues (expense)


883



6,670



(3,645
)






(3,984
)


(76
)Operating expenses


6,261



9,447











(3,703
)


12,005Deferral of expenses under
    SFAS 91


















(281
)


(281
)Pretax income (loss)


(5,378
)


(2,777
)


(3,645
)










(11,800
)Net income (loss)

$
(3,275
)

$
(1,691
)

$
(2,526
)

$



$



$
(7,492
)     (1)
    
    Includes loans sold of $1.5 billion and $2.0 billion
    for the three months ended June 30, 2007 and 2006,
    respectively.  CORPORATE
    OVERHEAD SEGMENT
   30




---



##### Table of Contents



CONSOLIDATED
    RISK MANAGEMENT DISCUSSION



We manage many types of risks with several layers of risk
    management and oversight, using both a centralized and
    decentralized approach. Our philosophy is to put risk management
    at the core of our operations and establish a unified framework
    for measuring and managing risk across the enterprise, providing
    our business units with the tools  and
    accountability  to manage risk. At the corporate
    level, this consolidated risk management is known as Enterprise
    Risk Management (ERM). ERM, in partnership with the
    Board of Directors and senior management, provide support to the
    business units.



ERM, as a part of management, develops, maintains and monitors
    our cost effective yet comprehensive enterprise-wide risk
    management framework, including our system of operating internal
    controls. ERM fosters a risk management culture throughout
    Indymac and exists to protect us from unexpected losses,
    earnings surprises and reputation damage. It also provides
    management and the Board with a better understanding of the
    trade-offs between risks and rewards, leading to smarter
    investment decisions and more consistent and generally higher
    long-term returns on equity.



CAMELS
    FRAMEWORK FOR RISK MANAGEMENT



The framework for organizing ERM is based on the six-point
    rating scale used by the Office of Thrift Supervision
    (OTS), our regulating body, to evaluate the
    financial condition of savings and loan associations. A
    discussion of the areas covered by CAMELS (Capital, Asset
    Quality, Management, Earnings, Liquidity and Sensitivity to
    Market Risk) follows.



CAPITAL



The Bank is subject to regulatory capital regulations
    administered by the federal banking agencies. As of
    June 30, 2007, the Bank met all of the requirements of a
    well-capitalized institution under the general
    regulatory capital regulations.



Our business is primarily centered on single-family lending and
    the related production and sale of loans. As such, the
    accumulation of MSRs is a large component of our strategy. As of
    June 30, 2007, the capitalized value of MSRs was
    $2.4 billion. OTS regulations generally impose higher
    capital requirements on MSRs that exceed total Tier 1
    capital. These higher capital requirements could result in
    lowered returns on our retained assets and could limit our
    ability to retain servicing assets. We have flexibility to sell
    or retain MSRs and the ability to increase our capital base
    through retention of earnings and other capital raising
    activities. While management believes that compliance with the
    capital limits on MSRs will not materially impact future
    results, no assurance can be given that our plans and strategies
    will be successful.



Capital
    Ratios



The following presents the Banks actual and required
    capital ratios and the minimum required capital ratios to be
    categorized as well-capitalized at June 30,
    2007: Capital RatiosTangible


Tier 1 Core


Tier 1 Risk-Based


Total Risk-Based(Dollars in thousands)June 30, 2007:As reported pre-subprime
    risk-weighting


8.10
%


8.10
%


11.85
%


12.24
%Adjusted for additional subprime
    risk weighting


8.10
%


8.10
%


11.70
%


12.09
%Well-capitalized minimum


2.00
%


5.00
%


6.00
%


10.00
%Excess over well-capitalized
    minimum requirement

$
1,890,746


$
960,733


$
1,087,413


$
398,270  31




---



##### Table of Contents



Capital
    Management and Allocation
   32




---



##### Table of Contents



Total Assets


Core


Risk-Based% of


Avg.


% of








Avg.


% ofAverage


Total


Allocated


Total


Capital/





Allocated


Total


Capital/Three Months Ended June 30, 2007

Assets


Assets


Capital


Capital


Assets


ROE


Capital


Capital


Assets


ROEMortgage Banking:Consumer Direct

$
135,405



0.4
%

$
5,416



0.3
%


4.0
%


(27
)%

$
6,302



0.3
%


4.7
%


(23
)%Retail


102,598



0.3
%


4,104



0.2
%


4.0
%


(461
)%


9,271



0.4
%


9.0
%


(202
)%Wholesale


5,256,382



14.7
%


210,255



10.1
%


4.0
%


44
%


260,417



12.5
%


5.0
%


36
%Correspondent


1,351,321



3.8
%


54,053



2.6
%


4.0
%


23
%


68,811



3.3
%


5.1
%


19
%Conduit


5,927,757



16.5
%


237,110



11.4
%


4.0
%


(4
)%


258,857



12.5
%


4.4
%


(3
)%Total Mortgage Professionals
    Group


12,638,058



35.3
%


505,522



24.3
%


4.0
%


15
%


597,356



28.7
%


4.7
%


13
%Financial Freedom


1,118,212



3.1
%


139,018



6.7
%


12.4
%


54
%


131,610



6.3
%


11.8
%


57
%Total Production
    Divisions


13,891,675



38.8
%


649,956



31.3
%


4.7
%


23
%


735,268



35.3
%


5.3
%


21
%Mortgage Servicing Rights


2,937,446



8.2
%


206,437



9.9
%


7.0
%


42
%


309,189



14.9
%


10.5
%


29
%Servicing/Customer Retention


869,470



2.4
%


34,779



1.7
%


4.0
%


110
%


39,171



1.9
%


4.5
%


98
%Total Mortgage
    Servicing


3,806,916



10.6
%


241,246



11.6
%


6.3
%


52
%


348,360



16.8
%


9.2
%


37
%Mortgage Bank Overhead


137,435



0.4
%


5,498



0.3
%


4.0
%


N/A



16,196



0.8
%


11.8
%


N/ATotal Consumer Mortgage
    Banking


17,836,026



49.8
%


896,670



43.2
%


5.0
%


26
%


1,099,824



52.9
%


6.2
%


22
%Commercial Mortgage Banking


14,500







580







4.0
%


(728
)%


605







4.2
%


(698
)%Total Mortgage Banking


17,850,526



49.8
%


897,250



43.2
%


5.0
%


26
%


1,100,429



52.9
%


6.2
%


22
%Thrift:Investment grade securities


4,334,414



12.1
%


173,377



8.3
%


4.0
%


9
%


82,044



3.9
%


1.9
%


16
%Non-investment grade and residuals


393,190



1.1
%


15,728



0.8
%


4.0
%


(77
)%


210,102



10.1
%


53.4
%


(3
)%Total Mortgage-Backed
    Securities


4,727,604



13.2
%


189,105



9.1
%


4.0
%


2
%


292,146



14.0
%


6.2
%


3
%Consumer lending portfolioPrime SFR mortgage loans


5,868,151



16.4
%


234,726



11.3
%


4.0
%


(2
)%


219,454



10.6
%


3.7
%


(2
)%Home equity division


1,432,950



4.0
%


57,553



2.8
%


4.0
%


(13
)%


108,489



5.2
%


7.6
%


(5
)%Total Consumer Loans


7,301,101



20.4
%


292,279



14.1
%


4.0
%


(4
)%


327,943



15.8
%


4.5
%


(3
)%Consumer construction division


2,811,200



7.8
%


112,448



5.4
%


4.0
%


32
%


139,491



6.7
%


5.0
%


26
%Total Consumer Thrift
    Activities


10,112,301



28.2
%


404,727



19.5
%


4.0
%


6
%


467,434



22.5
%


4.6
%


5
%Home builder division


1,232,691



3.4
%


49,308



2.4
%


4.0
%


48
%


110,709



5.3
%


9.0
%


23
%Warehouse Lending


298,607



0.8
%


11,944



0.6
%


4.0
%


24
%


24,296



1.2
%


8.1
%


14
%Total Commercial Thrift
    Activities


1,531,298



4.2
%


61,252



3.0
%


4.0
%


43
%


135,005



6.5
%


8.8
%


21
%Discontinued products


28,136



0.1
%


1,125



0.1
%


4.0
%


27
%


2,936



0.1
%


10.4
%


12
%Total Thrift
    Activities


16,399,339



45.7
%


656,209



31.7
%


4.0
%


8
%


897,521



43.1
%


5.5
%


7
%Consumer Bank  Deposits


47,658



0.1
%


1,906



0.1
%


4.0
%


N/A



1,984



0.1
%


4.2
%


N/ATreasury


















N/A



N/A











N/A



N/AEliminations


















N/A



N/A











N/A



N/ATotal Operating
    Activities


34,297,523



95.6



1,555,365



75.0
%


4.5
%


15
%


1,999,934



96.1
%


5.8
%


13
%Corporate overhead


1,538,978



4.4



522,209



25.0
%


33.9
%


N/A



77,640



3.9
%


5.0
%


N/ATotal Company

$
35,836,501



100.0
%

$
2,077,574



100.0
%


5.8
%


9
%

$
2,077,574



100.0
%


5.8
%


9
%  33




---



##### Table of Contents



ASSET
    QUALITY
        ReserveCredit Risk Area

Reserve Type

Balance


Balance


UPB(Dollars in millions)Mortgage Banking:Loans held for sale(1)

Market valuation reserve

$
11,762


$
113


$
11,727Repurchase risk

Secondary market reserve


N/A



47



167,710Thrift(3):Loans held for investment

Allowance for loan losses


8,648



77



8,589Non-investment grade and residual
    securities(4)

Loss assumption in valuations


443



698



21,002Foreclosed Assets

Reduction in book value due 
    to property value deterioration


64



12



76     (1)
    
    Risks include borrowers credit deteriorating and adversely
    impacting loan saleability; further deterioration of credit
    quality of loans previously repurchased for repurchase/warranty
    issues of through called deals and actual losses exceeding
    losses that are assumed in our valuations.(2)
    
    Risks include repurchase of impaired loans due to EPD or other
    repurchase and warranty violations beyond the amount reserved at
    time of sale and Indymac loans becoming unsaleable or suffer
    adverse price impact due to poor performance of previously sold
    Indymac collateral.(3)
    
    Risk includes credit losses exceeding the risk priced for in the
    allowance.(4)
    
    Reserve balance for non-investment grade and residual securities
    represents the expected remaining cumulative losses.  Non-Performing
    Assets
   34




---



##### Table of Contents



June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)Total non-performing loans

$
451,944


$
104,641


$
162,830Foreclosed assets


63,749



11,999



21,638Total non-performing assets

$
515,693


$
116,640


$
184,468Total non-performing assets to
    total assets


1.63
%


0.49
%


0.63
%       June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)SFR mortgage loans

$
136,375


$
42,888


$
66,360Consumer construction division


32,161



15,562



25,957Homebuilder division


40,055







8,981Other (1)


4,493



5,463



7,185Total non-performing loans held
    for investment

$
213,084


$
63,913


$
108,483Allowance for loan losses to
    non-performing loans held for investment


36
%


91
%


58
%     (1)
    
    Includes loans from the home equity division, discontinued
    products and the warehouse lending division.  Allowance
    for Loan Losses
   35




---



##### Table of Contents



TotalAllowance


Reserves as afor Loan


Percentage ofBy Division

Book Value


Losses


Book Value(Dollars in thousands)SFR mortgage loans

$
4,711,362


$
36,253



0.77
%Consumer construction division


2,328,637



11,789



0.51
%Homebuilder division


1,290,470



21,447



1.66
%Other(1)


317,095



7,367



2.32
%Total held for investment
    portfolio at June 30, 2007

$
8,647,564


$
76,856



0.89
%Total held for investment
    portfolio at December 31, 2006

$
10,177,209


$
62,386



0.61
%     Three Months Ended


Six Months EndedJune 30,


June 30,


June 30,


June 30,2007


2006


2007


2006(Dollars in thousands)Balance, beginning of period

$
67,587


$
57,321


$
62,386


$
55,168Allowance transferred to loans
    held for sale


(327
)






(1,988
)


Provision for loan losses


17,204



2,230



27,891



6,052Charge-offs, net of recoveries:SFR mortgage loans


(4,214
)


(54
)


(5,600
)


(568
)Consumer construction division


(1,693
)


(854
)


(3,084
)


(1,239
)Other(1)


(1,701
)


(731
)


(2,749
)


(1,501
)Total charge-offs, net of
    recoveries


(7,608
)


(1,639
)


(11,433
)


(3,308
)Balance, end of period

$
76,856


$
57,912


$
76,856


$
57,912Annualized charge-offs to average
    loans held for investment


0.35
%


0.08
%


0.24
%


0.08
%     (1)
    
    Includes loans from the home equity division, discontinued
    product and warehouse lending division.      Credit
    Discounts
   36




---



##### Table of Contents



June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)Loans held for sale before market
    valuation reserves

$
11,875,260


$
6,510,614


$
9,507,307Market valuation reserves


(113,093
)


(17,474
)


(39,464
)Net loans held for sale portfolio

$
11,762,167


$
6,493,140


$
9,467,843Market valuation reserves as a
    percentage of gross loans held for sale


0.95
%


0.27
%


0.42
%Non-performing loans held for
    sale, net of applicable market valuation reserves

$
238,860


$
40,728


$
54,347Non-performing loans held for sale
    as a percentage of net loans held for sale portfolio


2.03
%


0.63
%


0.57
%   Secondary
    Market Reserve
      Three Months Ended


Six Months EndedJune 30,


June 30,


June 30,


June 30,2007


2006


2007


2006(Dollars in millions)Loans sold:GSEs and whole loans

$
10,815


$
10,477


$
27,961


$
20,638Securitization trusts


9,379



8,938



16,769



15,485Total

$
20,194


$
19,415


$
44,730


$
36,123Total repurchases(1)

$
219


$
48


$
443


$
62Repurchases as a percentage of
    total loans sold during the period


1.08
%


0.25
%


0.99
%


0.17
%     (1)
    
    Amounts exclude repurchases that are administrative in nature
    and generally are re-sold immediately at little or no loss.   37




---



##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,


June 30,


June 30,2007


2006


2007


2006(Dollars in thousands)Balance, beginning of period

$
50,592


$
30,413


$
33,932


$
27,638Additions/provisions


24,235



10,246



55,905



14,773Actual losses/mark-to-market


(28,779
)


(5,258
)


(43,864
)


(7,784
)Recoveries on previous claims


566



1



641



775Balance, end of period

$
46,614


$
35,402


$
46,614


$
35,402     Credit
    Reserves Embedded in Non-Investment Grade and Residual
    Securities
      June 30,


June 30,


March 31,2007


2006


2007(Dollars in millions)Non-investment Grade and
    Residual Securities:Fair market value

$
443


$
329


$
381As a percentage of Tier 1
    core capital


18
%


18
%


18
%UPB of underlying collateral

$
21,002


$
13,662


$
15,505Credit reserves embedded in value

$
698


$
378


$
621Additions to credit reserves

$
126


$
62


$
160Net charge-off (losses)

$
49


$
5


$
17Credit reserves/NPAs


91
%


131
%


84
%   MANAGEMENT
  follow-up
 38




---



##### Table of Contents



EARNINGS
    LIQUIDITY
      June 30,


June 30,


December 31,2007


2006


2006(Dollars in thousands)Deposits

$
11,746,654


$
9,351,871


$
10,898,006Advances from FHLB


10,872,800



7,069,800



10,412,800Other Borrowings:Asset-backed commercial paper


2,855,922



667,341



2,114,508Loans and securities sold under
    agreements to repurchase


941,723



2,211,053



1,405,505HELOC notes payable


288,312



881,179



659,283Trust preferred debentures


441,180



401,800



456,695Other notes payable


399



3,167



1,009$
27,146,990


$
20,586,211


$
25,947,806   Principal
    Sources of Cash
  Loan
    Sales and Securitizations
   39




---



##### Table of Contents



Deposits/Retail
    Bank
  www.indymacbank.com 24-hours
  Advances
    from Federal Home Loan Bank
      Other
    Borrowings, Excluding Subordinated Debentures Underlying
    Trust Preferred Securities
    and/or
  P-1 A-1+
 40




---



##### Table of Contents



364-day
  Trust Preferred
    Securities and Warrants
    3-month
  Direct
    Stock Purchase Plan
    Cash
    from Operating Activities
   41




---



##### Table of Contents



SENSITIVITY
    TO MARKET RISK
      Net
    Interest Margin
    Three Months EndedJune 30, 2007


June 30, 2006


March 31, 2007Average





Yield/


Average





Yield/


Average





Yield/Balance


Interest


Rate


Balance


Interest


Rate


Balance


Interest


Rate(Dollars in thousands)AssetsSecurities

$
5,221,396


$
95,537



7.34
%

$
4,596,115


$
80,998



7.07
%

$
5,377,680


$
92,279



6.96
%Loans held for sale


16,208,651



289,262



7.16
%


10,532,302



181,079



6.90
%


14,442,890



252,157



7.08
%Mortgage loans held for investment


5,615,519



88,622



6.33
%


6,016,878



86,092



5.74
%


7,117,335



108,994



6.21
%Builder construction loans


815,861



20,209



9.94
%


743,515



19,221



10.37
%


789,266



19,753



10.15
%Consumer construction loans


2,190,732



44,519



8.15
%


1,957,587



34,138



6.99
%


2,158,355



43,646



8.20
%Investment in Federal Home Loan
    Bank stock and other


1,202,869



16,328



5.44
%


834,180



10,683



5.14
%


1,144,072



15,848



5.62
%Total interest-earning assets


31,255,028



554,477



7.12
%


24,680,577



412,211



6.70
%


31,029,598



532,677



6.96
%Mortgage servicing assets


2,153,439











1,434,234











1,867,582Other


2,428,034











1,655,158











2,443,740Total assets

$
35,836,501










$
27,769,969










$
35,340,920Liabilities and
    Shareholders EquityInterest-bearing deposits

$
10,761,811



138,618



5.17
%

$
8,211,312



92,840



4.53
%

$
10,333,760



132,067



5.18
%Advances from Federal Home Loan Bank


14,059,734



184,175



5.25
%


9,775,167



110,468



4.53
%


13,651,211



174,529



5.18
%Other borrowings


5,737,455



82,440



5.76
%


5,923,472



78,749



5.33
%


6,428,718



91,011



5.74
%Total interest-bearing liabilities


30,559,000



405,233



5.32
%


23,909,951



282,057



4.73
%


30,413,689



397,607



5.30
%Other


3,199,927











2,117,781











2,894,332Total liabilities


33,758,927











26,027,732











33,308,021Shareholders equity


2,077,574











1,742,237











2,032,899Total liabilities and
    shareholders equity

$
35,836,501










$
27,769,969










$
35,340,920Net interest income





$
149,244










$
130,154










$
135,070Net interest spread










1.80
%










1.97
%










1.66
%Net interest margin










1.92
%










2.12
%










1.77
%   42




---



##### Table of Contents



Six Months EndedJune 30, 2007


June 30, 2006Average





Yield


Average





YieldBalance


Interest


Rate


Balance


Interest


Rate(Dollars in thousands)AssetsSecurities

$
5,299,107


$
187,816



7.15
%

$
4,363,348


$
147,481



6.82
%Loans held for sale


15,330,649



541,419



7.12
%


10,579,433



354,640



6.76
%Mortgage loans held for investment


6,362,278



197,616



6.26
%


5,981,016



168,271



5.67
%Builder construction loans


802,637



39,962



10.04
%


703,275



34,584



9.92
%Consumer construction loans


2,174,633



88,165



8.18
%


1,905,814



64,502



6.83
%Investment in Federal Home Loan
    Bank stock and other


1,173,632



32,176



5.53
%


824,490



20,579



5.03
%Total interest-earning assets


31,142,936



1,087,154



7.04
%


24,357,376



790,057



6.54
%Mortgage servicing assets


2,011,300











1,287,492Other


2,435,843











1,498,698Total assets

$
35,590,079










$
27,143,566Liabilities and
    Shareholders EquityInterest-bearing deposits

$
10,548,968



270,685



5.17
%

$
7,766,962



167,083



4.34
%Advances from Federal Home Loan
    Bank


13,856,601



358,704



5.22
%


9,875,570



214,077



4.37
%Other borrowings


6,081,177



173,451



5.75
%


5,937,527



151,533



5.15
%Total interest-bearing liabilities


30,486,746



802,840



5.31
%


23,580,059



532,693



4.56
%Other


3,047,974











1,893,236Total liabilities


33,534,720











25,473,295Shareholders equity


2,055,359











1,670,271Total liabilities and
    shareholders equity

$
35,590,079










$
27,143,566Net interest income





$
284,314










$
257,364Net interest spread










1.73
%










1.98
%Net interest margin










1.84
%










2.13
%    43




---



##### Table of Contents



Increase/(Decrease) Due toVolume(1)


Rate(2)


Mix(3)


Total Change(Dollars in thousands)Three Months Ended
    June 30, 2007 vs. 2006Interest income:Securities

$
11,019


$
3,098


$
422


$
14,539Loans held for sale


97,592



6,882



3,709



108,183Mortgage loans held for investment


(5,743
)


8,864



(591
)


2,530Builder construction loans


1,870



(804
)


(78
)


988Consumer construction loans


4,066



5,643



672



10,381Investment in Federal Home Loan
    Bank stock and other


4,722



640



283



5,645Total interest income


113,526



24,323



4,417



142,266Interest expense:Interest-bearing deposits


28,837



12,926



4,015



45,778Advances from Federal Home Loan
    Bank


48,419



17,581



7,707



73,707Other borrowings


(2,473
)


6,364



(200
)


3,691Total interest expense


74,783



36,871



11,522



123,176Net interest income

$
38,743


$
(12,548
)

$
(7,105
)

$
19,090   Increase/(Decrease) Due toVolume(1)


Rate(2)


Mix(3)


Total Change(Dollars in thousands)Six Months Ended June 30,
    2007 vs. 2006Interest income:Securities

$
31,629


$
7,169


$
1,537


$
40,335Loans held for sale


159,269



18,984



8,526



186,779Mortgage loans held for investment


10,726



17,503



1,116



29,345Builder construction loans


4,886



431



61



5,378Consumer construction loans


9,098



12,764



1,801



23,663Investment in Federal Home Loan
    Bank stock and other


8,714



2,025



858



11,597Total interest income


224,322



58,876



13,899



297,097Interest expense:Interest-bearing deposits


59,847



32,216



11,539



103,602Advances from Federal Home Loan
    Bank


86,299



41,571



16,757



144,627Other borrowings


3,666



17,821



431



21,918Total interest expense


149,812



91,608



28,727



270,147Net interest income

$
74,510


$
(32,732
)

$
(14,828
)

$
26,950     (1)
    
    Changes in volume are calculated by taking changes in average
    balances multiplied by the prior periods average interest
    rate.(2)
    
    Changes in the rate are calculated by taking changes in the
    average interest rate multiplied by the prior periods
    average balance. 44




---



##### Table of Contents



(3)
    
    Changes in rate/volume (mix) are calculated by
    taking changes in rates times the changes in volume.  Net
    Interest Margin by Segment
    Three Months EndedJune 30, 2007


June 30, 2006


March 31, 2007Average


Net


Net


Average


Net


Net


Average


Net


NetEarning


Interest


Interest


Earning


Interest


Interest


Earning


Interest


InterestAssets


Income


Margin


Assets


Income


Margin


Assets


Income


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

$
16,621


$
95



2.29
%

$
15,252


$
92



2.43
%

$
17,367


$
90



2.11
%Mortgage banking segment


14,634



54



1.49
%


9,429



38



1.61
%


13,663



45



1.33
%Total Company

$
31,255


$
149



1.92
%

$
24,681


$
130



2.12
%

$
31,030


$
135



1.77
%   Six Months EndedJune 30, 2007


June 30, 2006Average


Net


Net


Average


Net


NetEarning


Interest


Interest


Earning


Interest


InterestAssets


Income


Margin


Assets


Income


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

$
16,992


$
185



2.20
%

$
14,959


$
179



2.42
%Mortgage banking segment


14,151



99



1.41
%


9,398



78



1.67
%Total Company

$
31,143


$
284



1.84
%

$
24,357


$
257



2.13
%     Loans
    Held for Sale and Pipeline Hedging
      Accounting for Derivative Instruments and Hedging
    Activities, Application of Accounting
    Principles to Loan Commitments.
 45




---



##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,


Percent


March 31,


Percent


June 30,


June 30,


Percent2007


2006


Change


2007


Change


2007


2006


Change(Dollars in millions)Gross MBR margin


0.91
%


1.96
%


(53
)%


1.12
%


(18
)%


1.02
%


1.72
%


(40
)%MBR margin after hedging(1)


1.31
%


1.67
%


(22
)%


1.11
%


18
%


1.20
%


1.55
%


(23
)%     (1)
    
    Before credit costs and SFAS 91 deferred costs.  Hedging
    Interest Rate Risk On Servicing-Related Assets
        Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in thousands)Valuation adjustment due to market
    changes and external benchmarking

$
222,659


$
64,381


$
30,840


$
253,499


$
144,864Loss on financial instruments used
    to hedge MSRs


(213,213
)


(66,660
)


(28,747
)


(241,960
)


(146,289
)Hedge (loss) gain on AAA-rated and
    agency interest-only securities


(14,741
)


(4,259
)


(435
)


(15,176
)


(13,632
)Unrealized gain on AAA-rated and
    agency interest-only securities


10,465



6,272



1,481



11,947



12,767Unrealized (loss) gain on
    principal-only securities


(4,916
)


(5,614
)


301



(4,615
)


(6,508
)Unrealized (loss) gain on
    prepayment penalty securities


(21,658
)


10,909



(2,204
)


(23,862
)


4,657Net (loss) gain on MSRs, AAA-rated
    and agency interest-only securities, and hedges

$
(21,404
)

$
5,029


$
1,236


$
(20,167
)

$
(4,141
)    46




---



##### Table of Contents



Value-at-Risk
  value-at-risk one-day
      Net
    Portfolio Value
      June 30, 2007


December 31, 2006Effect of Change in





Effect of Change inInterest Rates





Interest RatesDecrease


Increase





Decrease


IncreaseFair Value


100 bps


100 bps


Fair Value


100 bps


100 bps(Dollars in thousands)Cash and cash equivalents

$
616,678


$
616,678


$
616,678


$
541,545


$
541,545


$
541,545Trading securities


1,107,179



1,117,185



1,055,300



541,175



573,028



522,503Available for sale securities


4,166,431



4,263,762



4,022,674



4,183,629



4,272,980



4,064,097Loans held for sale


11,906,329



12,069,863



11,675,103



9,566,224



9,645,767



9,440,968Loans held for investment


8,697,274



8,772,005



8,600,878



10,191,350



10,266,772



10,081,430MSRs


2,387,077



1,922,512



2,670,966



1,822,455



1,393,979



2,142,276Other assets


2,375,963



2,734,183



2,324,067



1,992,698



2,317,284



1,813,516Total assets

$
31,256,931


$
31,496,188


$
30,965,666


$
28,839,076


$
29,011,355


$
28,606,335Deposits

$
11,953,481


$
11,983,998


$
11,923,248


$
11,045,977


$
11,076,458


$
11,015,812Advances from Federal Home Loan Bank


10,829,789



10,988,867



10,670,182



10,409,767



10,565,054



10,256,128Other borrowings


3,761,040



3,762,530



3,759,552



3,464,290



3,466,577



3,462,006Other liabilities


927,126



927,126



927,126



775,455



775,455



775,455Total liabilities


27,471,436



27,662,521



27,280,108



25,695,489



25,883,544



25,509,401Shareholders equity (NPV)

$
3,785,495


$
3,833,667


$
3,685,558


$
3,143,587


$
3,127,811


$
3,096,934% Change from base case






1.27
%


(2.64
)%






(0.50
)%


(1.48
)%    47




---



##### Table of Contents



48




---



##### Table of Contents



EXPENSES



A summary of non-interest expense follows: Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in thousands)Salaries and related

$
180,234


$
179,280


$
182,474


$
362,708


$
331,838Premises and equipment


24,961



20,113



24,297



49,258



37,085Loan purchase and servicing costs


14,057



13,149



15,026



29,083



26,055Professional services


8,853



8,158



9,864



18,717



16,266Data processing


20,331



15,758



19,756



40,087



30,033Office and related


16,977



17,602



16,127



33,104



32,697Advertising and promotion


9,659



12,409



9,635



19,294



23,626Operations and sale of foreclosed
    assets


4,291



385



2,180



6,471



927Other


5,920



3,005



5,038



10,958



6,324Deferral of expenses under
    SFAS 91


(61,258
)


(66,175
)


(68,647
)


(129,905
)


(129,401
)Total operating expenses


224,025



203,684



215,750



439,775



375,450Amortization of other intangible
    assets


430



130



430



860



264Total non-interest expense

$
224,455


$
203,814


$
216,180


$
440,635


$
375,714          49




---



##### Table of Contents



PROSPECTIVE
    TRENDS AND FUTURE OUTLOOK



We anticipate that the second half of 2007 and 2008 will
    continue to be challenging for the mortgage and housing markets
    and for Indymac. We expect competitive pricing pressures on our
    MBR margins to continue. In addition, we expect that the
    current, temporary volatility and reduced liquidity in the
    secondary markets will adversely impact secondary market
    execution, putting further pressure on MBR margins, although we
    expect this negative impact to abate once the secondary market
    stabilizes. While our recent guideline tightening has improved
    the quality of our loan production, additional deterioration in
    the housing market could further increase our credit costs.



Notwithstanding the current tough market conditions, we are
    confident we will be able to navigate through the industry
    storms and expect to remain solidly profitable during this
    cyclical downturn in our business. We are also optimistic about
    the long term profit and growth prospects for both the mortgage
    industry and Indymac and are confident that our hybrid
    thrift/mortgage banking business model and related strategies,
    and our execution relative to our competitors, will position us
    favorably for when the markets do recover. However, given the
    significant current uncertainties in the housing and mortgage
    markets and, in particular, in the secondary market, we feel it
    is prudent to temporarily refrain from our normal practice of
    providing quantitative guidance.



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



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



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



In connection with our loan sales that are securitization
    transactions, there are $76.5 billion in loans owned by
    off-balance sheet trusts as of June 30, 2007. 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. Generally, neither the
    third-party investors nor the trusts have recourse to our assets
    or us, and they have no ability to require us to repurchase
    their loans other than for non-credit-related recourse that can
    arise under standard representations and warranties. We maintain
    secondary market reserves mostly for losses that could arise in
    connection with loans that we are required to repurchase from
    GSEs, whole loan sales and securitizations. For information on
    the sales proceeds and cash flows from our securitizations for
    2007, see Liquidity and Capital Resources 
    Principal Sources of Cash  Loan Sales and
    Securitizations.



We often retain certain interests, which may include
    subordinated classes of securities, MSRs, AAA-rated and agency
    interest-only securities, prepayment penalty 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. See discussions on MSRs and other retained
    assets under Mortgage Servicing and
    Mortgage-Backed Securities on page 19 and 23,
    respectively.



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

50




---



##### Table of Contents



AGGREGATE
    CONTRACTUAL OBLIGATIONS



Our material contractual obligations were summarized and
    included in our 2006
    10-K. There
    have been no material changes outside the ordinary course of our
    business in the contractual obligations as specified in our 2006
    10-K during
    the six months ended June 30, 2007. CRITICAL
    ACCOUNTING POLICIES AND JUDGMENTS



Several of the critical accounting policies that are very
    important to the portrayal of our financial condition and
    results of operations require management to make difficult and
    complex judgments that rely on estimates about the effect of
    matters that are inherently uncertain due to the impact of
    changing market conditions
    and/or
    consumer behavior. We believe our most critical accounting
    policies relate to: (1) assets that are highly dependent on
    internal valuation models and assumptions rather than market
    quotations, including, AAA-rated and agency interest-only
    securities, prepayment penalty securities, MSRs and
    non-investment grade and residual securities;
    (2) derivatives hedging instruments and hedge accounting;
    (3) our allowance for loan losses (ALL); and
    (4) our secondary market reserve. Refer to pages 80 to 85
    of our 2006
    10-K for
    further discussion of our critical accounting policies and
    judgments.



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. REGULATORY
    UPDATE



The federal banking agencies published the final Statement
    on Subprime Mortgage Lending on June 29, 2007 to
    address certain risks and emerging issues relating to subprime
    mortgage lending practices. The statement specifies that an
    institutions analysis of a borrowers repayment
    capacity should include an evaluation of the borrowers
    ability to repay the debt by its final maturity at the fully
    indexed rate, assuming a fully amortizing repayment schedule. In
    addition, stated income and reduced documentation should be
    accepted only if there are documented mitigating factors that
    clearly minimize the need for verification of a borrowers
    repayment capacity. The statement also underscores that
    communications with consumers should provide clear and balanced
    information about the relative benefits and risks of the
    products. In anticipation of the final guidance, we had already
    begun reducing stated income subprime lending. Additionally, as
    subprime lending represents such a small percentage of our total
    mortgage loan production, such reduction would only reduce 1.3%
    of our total mortgage bank production. OTHER
    CONSIDERATIONS



Under OTS regulations, limitations have been imposed on all
    capital distributions, including cash dividends. Indymac
    Bancorp, as the holding company for the Bank, is substantially
    dependent upon dividends from the Bank for cash used to pay
    dividends on common stock and other cash outflows. We are
    required to seek approval from the OTS in order to pay dividends
    from the Bank to the Parent Company. There is no assurance that
    the Bank will be able to pay such dividends in the future or
    that the OTS will continue to grant approvals. While the holding
    company maintains cash and an unsecured line of credit to manage
    its liquidity, a disruption in dividends from the Bank could
    cause the holding company to reduce or eliminate the dividends
    paid on common stock.



For holders of the Banks Series A preferred stock and
    Indymac Bancorps common stock, dividends we pay will be
    treated as dividends for U.S. federal income tax purposes
    only to the extent paid out of our current or accumulated
    earnings and profits as measured by federal and
    state tax law. Any dividend that we pay at a time when we do not
    have any current or accumulated earnings and profits will not be
    taxable as a dividend for U.S. federal income tax purposes,
    and instead will be treated first as a return of capital,
    reducing a holders basis in its stock to the extent of
    such basis, and thereafter as capital gain. Any dividends we pay
    that are not treated as dividends will not be eligible for the
    dividends-received deduction or the reduced rates of taxation
    available for certain holders subject to U.S. federal
    income tax.

51




---



##### Table of Contents



APPENDIX A:
    ADDITIONAL QUANTITATIVE DISCLOSURES



We believe that the information provided in the body of this
    10-Q
    provides a good overview of the Companys business and its
    results for the second quarter of 2007. However, we are
    including the following tables for a more detailed analysis of
    our operations.



TABLE OF
    CONTENTS Table



Page1


Product
    Profitability Analysis


532


S&P Lifetime
    Loss Estimates


593


Production by
    Product  FICO and CLTV


594


SFR Mortgage
    Production and Pipeline by Purpose


605


SFR Mortgage
    Production by Amortization Type


606


SFR Mortgage by
    Geographic Distribution


617


MBR
    Margin


618


Servicing Fee
    Income


619


Mortgage Servicing
    Rights Rollforward


6210


Gain (Loss) on
    Mortgage-Backed Securities


6311


Unrealized Gains
    and Losses of Securities Available for Sale


6312


Other Investment
    Grade and Non-Investment Grade Mortgage-Backed
    Securities


6413


Other Retained
    Assets


6514


Valuation of MSRs,
    Interest-Only, Prepayment Penalty and Residual
    Securities


6715


Deposits by Channel
    and Category


68  52




---



##### Table of Contents



TABLE 1.
    PRODUCT PROFITABILITY ANALYSIS



As part of our process of measuring results and holding managers
    responsible for specific targets, we evaluate profitability at
    the product level in addition to our segment results. We
    currently have four product groups: standard consumer home loans
    held for sale, specialty consumer home loans held for sale
    and/or
    investment, home loans and related investment, and specialty
    commercial loans held for investment. Please refer to our 2006
    10-K, pages
    29 to 30, for further discussion on the products included within
    each product group.



The following tables summarize the profitability for each of the
    four product groups and the loan servicing operations for the
    periods indicated: HomeStandard


Specialty


Loans &


SpecialtyConsumer


Consumer


Related


Commercial








TotalHome Loans


Home Loans


Investments


Loans


Treasury


Overhead


Company(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income

$
50,770


$
42,077


$
32,571


$
20,134


$
674


$
3,018


$
149,244Provision for loan losses






(2,144
)


(13,800
)


(1,260
)










(17,204
)Gain (loss) on sale of loans


53,633



23,304



23,870



223











101,030Service fee income






15,302



69,750











566



85,618Gain (loss) on sale of securities






(7,828
)


(38,519
)














(46,347
)Other income


6,953



11,239



2,926



1,972



236



2,087



25,413Net revenue (expense)


111,356



81,950



76,798



21,069



910



5,671



297,754Variable expenses


66,333



36,220



8,240



3,730











114,523Deferral of expenses under
    SFAS 91


(41,824
)


(13,679
)


(3,384
)


(2,370
)










(61,257
)Fixed expenses


58,009



25,856



18,218



7,522



3,260



58,324



171,189Pre-tax income (loss)


28,838



33,553



53,724



12,187



(2,350
)


(52,653
)


73,299Net income (loss)

$
17,563


$
20,189


$
32,718


$
7,422


$
(1,431
)

$
(31,822
)

$
44,639Balance Sheet DataAverage interest-earning assets

$
12,155,773


$
5,470,428


$
11,437,931


$
1,770,540


$



$
420,356


$
31,255,028Allocated capital

$
561,585


$
428,577


$
751,503


$
154,860


$



$
181,049


$
2,077,574Performance RatiosROE


13
%


19
%


17
%


19
%


N/A



N/A



9
%Net interest margin


1.68
%


3.09
%


1.14
%


4.56
%


N/A



N/A



1.92
%MBR margin


0.68
%


1.61
%


1.40
%


N/A



N/A



N/A



0.80
%Efficiency ratio


74
%


58
%


25
%


40
%


N/A



N/A



71
%Operating DataLoan production

$
17,390,934


$
3,683,613


$
1,356,395


$
592,198


$



$



$
23,023,140Loans sold

$
16,284,021


$
2,201,062


$
1,708,494


$



$



$



$
20,193,577Three Months Ended June 30,
    2006Operating ResultsNet interest income

$
28,022


$
36,296


$
45,043


$
20,134


$
(859
)

$
1,518


$
130,154Provision for loan losses






(930
)


(975
)


(325
)










(2,230
)Gain (loss) on sale of loans


157,203



38,222



6,234















201,659Service fee income






6,238



20,521











488



27,247Gain (loss) on sale of securities






(4,375
)


12,633















8,258Other income






7,818



1,662



1,553



180



789



12,002Net revenue (expense)


185,225



83,269



85,118



21,362



(679
)


2,795



377,090Variable expenses


59,169



45,586



2,274



3,392











110,421Deferral of expenses under
    SFAS 91


(43,663
)


(19,391
)


(1,081
)


(2,040
)










(66,175
)Fixed expenses


48,459



23,885



11,816



4,846



2,098



69,121



160,225Pre-tax income (loss)


121,260



33,189



72,109



15,164



(2,777
)


(66,326
)


172,619Net income (loss)

$
73,847


$
20,048


$
43,914


$
9,235


$
(1,691
)

$
(40,695
)

$
104,658Balance Sheet DataAverage interest-earning assets

$
7,763,901


$
5,324,900


$
9,351,463


$
1,423,150


$



$
817,163


$
24,680,577Allocated capital

$
389,127


$
355,963


$
616,829


$
137,241


$



$
243,077


$
1,742,237Performance RatiosROE


76
%


23
%


29
%


27
%


N/A



N/A



24
%Net interest margin


1.45
%


2.73
%


1.93
%


5.67
%


N/A



N/A



2.12
%MBR margin


1.20
%


1.36
%


1.42
%


N/A



N/A



N/A



1.23
%Efficiency ratio


35
%


59
%


15
%


29
%


N/A



N/A



54
%Operating DataLoan production

$
14,968,754


$
4,628,706


$
412,416


$
580,706


$



$



$
20,590,582Loans sold

$
15,412,389


$
3,562,599


$
440,176


$



$



$



$
19,415,164  53




---



##### Table of Contents



Standard Consumer Home Loans Held for SalePrime


Subprime


Total(Dollars in thousands)Three Months Ended
    June 30, 2007Operating ResultsNet interest income

$
49,119


$
1,651


$
50,770Provision for loan losses










Gain (loss) on sale of loans


50,662



2,971



53,633Service fee income










Gain (loss) on sale of securities










Other income


6,665



288



6,953Net revenues (expense)


106,446



4,910



111,356Variable expenses


60,402



5,931



66,333Deferral of expenses under
    SFAS 91


(38,084
)


(3,740
)


(41,824
)Fixed expenses


53,135



4,874



58,009Pre-tax income (loss)


30,993



(2,155
)


28,838Net income (loss)

$
18,875


$
(1,312
)

$
17,563Balance Sheet DataAverage interest-earning assets

$
11,975,871


$
179,902


$
12,155,773Allocated capital

$
550,682


$
10,903


$
561,585Performance RatiosROE


14
%


(48
)%


13
%Net interest margin


1.65
%


3.68
%


1.68
%MBR margin


0.69
%


0.62
%


0.68
%Efficiency ratio


71
%


144
%


74
%Operating DataLoan production

$
16,669,901


$
721,033


$
17,390,934Loans sold

$
15,488,147


$
795,874


$
16,284,021Three Months Ended
    June 30, 2006Operating ResultsNet interest income

$
22,051


$
5,971


$
28,022Provision for loan losses










Gain (loss) on sale of loans


150,974



6,229



157,203Service fee income










Gain (loss) on sale of securities










Other income










Net revenues (expense)


173,025



12,200



185,225Variable expenses


52,590



6,579



59,169Deferral of expenses under
    SFAS 91


(38,802
)


(4,861
)


(43,663
)Fixed expenses


44,178



4,281



48,459Pre-tax income (loss)


115,059



6,201



121,260Net income (loss)

$
70,071


$
3,776


$
73,847Balance Sheet DataAverage interest-earning assets

$
6,794,839


$
969,062


$
7,763,901Allocated capital

$
328,268


$
60,859


$
389,127Performance RatiosROE


86
%


25
%


76
%Net interest margin


1.30
%


2.47
%


1.45
%MBR margin


1.16
%


2.36
%


1.20
%Efficiency ratio


34
%


49
%


35
%Operating DataLoan production

$
14,490,204


$
478,550


$
14,968,754Loans sold

$
14,896,035


$
516,354


$
15,412,389  54




---



##### Table of Contents



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


ReverseSeconds


Mortgages


CTP/Lot


Discontinued


Total(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income

$
21,287


$
4,354


$
15,978


$
458


$
42,077Provision for loan losses


(490
)






(1,529
)


(125
)


(2,144
)Gain (loss) on sale of loans


(35,382
)


45,216



13,470







23,304Service fee income


4,487



10,815











15,302Gain (loss) on sale of securities


(7,369
)






(459
)






(7,828
)Other income


3,602



130



7,507







11,239Net revenues (expense)


(13,865
)


60,515



34,967



333



81,950Variable expenses


6,202



21,685



8,333







36,220Deferral of expenses under
    SFAS 91


(3,870
)


(7,356
)


(2,453
)






(13,679
)Fixed expenses


3,423



14,895



7,353



185



25,856Pre-tax income (loss)


(19,620
)


31,291



21,734



148



33,553Net income (loss)

$
(11,949
)

$
18,812


$
13,236


$
90


$
20,189Balance Sheet DataAverage interest-earning assets

$
2,019,036


$
839,992


$
2,578,856


$
32,544


$
5,470,428Allocated capital

$
254,841


$
51,328


$
119,472


$
2,936


$
428,577Performance RatiosROE


(19
)%


147
%


44
%


12
%


19
%Net interest margin


4.23
%


2.08
%


2.49
%


5.64
%


3.09
%MBR margin


(12.51
)%


3.64
%


2.18
%


N/A



1.61
%Efficiency ratio


(43
)%


48
%


36
%


40
%


58
%Operating DataLoan production

$
875,826


$
1,257,652


$
1,550,135


$



$
3,683,613Loans sold

$
220,392


$
1,361,803


$
618,867


$



$
2,201,062Three Months Ended June 30,
    2006Operating ResultsNet interest income

$
21,410


$
1,589


$
12,714


$
583


$
36,296Provision for loan losses










(550
)


(380
)


(930
)Gain (loss) on sale of loans


(5,228
)


38,171



5,290



(11
)


38,222Service fee income


1,588



4,650











6,238Gain (loss) on sale of securities


(4,839
)






464







(4,375
)Other income


2,262



366



5,190







7,818Net revenues (expense)


15,193



44,776



23,108



192



83,269Variable expenses


14,403



20,948



10,235







45,586Deferral of expenses under
    SFAS 91


(8,710
)


(8,449
)


(2,232
)






(19,391
)Fixed expenses


3,020



13,716



7,055



94



23,885Pre-tax income (loss)


6,480



18,561



8,050



98



33,189Net income (loss)

$
3,946


$
11,140


$
4,902


$
60


$
20,048Balance Sheet DataAverage interest-earning assets

$
2,642,792


$
422,961


$
2,217,589


$
41,558


$
5,324,900Allocated capital

$
229,181


$
26,318


$
96,751


$
3,713


$
355,963Performance RatiosROE


7
%


170
%


20
%


6
%


23
%Net interest margin


3.25
%


1.51
%


2.30
%


5.63
%


2.73
%MBR margin


0.20
%


3.31
%


0.81
%


N/A



1.36
%Efficiency ratio


57
%


59
%


64
%


16
%


59
%Operating DataLoan production

$
1,860,406


$
1,336,561


$
1,431,739


$



$
4,628,706Loans sold

$
1,710,940


$
1,200,841


$
650,818


$



$
3,562,599  55




---



##### Table of Contents



Home Loans and Related InvestmentsRetained Servicing





SFR Loansand Retention





Held forActivities


MBS


Investment


Total(Dollars in thousands)Three Months Ended June 30,
    2007Operating ResultsNet interest income

$
3,932


$
16,319


$
12,320


$
32,571Provision for loan losses










(13,800
)


(13,800
)Gain (loss) on sale of loans


20,449







3,421



23,870Service fee income


69,750











69,750Gain (loss) on sale of securities


(26,769
)


(11,750
)






(38,519
)Other income


2,466







460



2,926Net revenues (expense)


69,828



4,569



2,401



76,798Variable expenses


8,240











8,240Deferral of expenses under
    SFAS 91


(3,384
)










(3,384
)Fixed expenses


14,458



984



2,776



18,218Pre-tax income (loss)


50,514



3,585



(375
)


53,724Net income (loss)

$
30,763


$
2,183


$
(228
)

$
32,718Balance Sheet DataAverage interest-earning assets

$
1,095,499


$
4,518,167


$
5,824,265


$
11,437,931Allocated capital

$
339,418


$
193,555


$
218,530


$
751,503Performance RatiosROE


36
%


5
%






17
%Net interest margin


1.44
%


1.45
%


0.85
%


1.14
%MBR margin


1.65
%


N/A



N/A



1.40
%Efficiency ratio


28
%


22
%


17
%


25
%Operating DataLoan production

$
1,356,395


$



$



$
1,356,395Loans sold

$
1,241,952


$



$
466,542


$
1,708,494Three Months Ended June 30,
    2006Operating ResultsNet interest income

$
15,327


$
9,238


$
20,478


$
45,043Provision for loan losses










(975
)


(975
)Gain (loss) on sale of loans


5,591



(122
)


765



6,234Service fee income


20,521











20,521Gain (loss) on sale of securities


12,561



72







12,633Other income


1,222



11



429



1,662Net revenues (expense)


55,222



9,199



20,697



85,118Variable expenses


2,274











2,274Deferral of expenses under
    SFAS 91


(1,081
)










(1,081
)Fixed expenses


10,474



286



1,056



11,816Pre-tax income (loss)


43,555



8,913



19,641



72,109Net income (loss)

$
26,525


$
5,428


$
11,961


$
43,914Balance Sheet DataAverage interest-earning assets

$
790,692


$
3,027,166


$
5,533,605


$
9,351,463Allocated capital

$
338,548


$
55,974


$
222,307


$
616,829Performance RatiosROE


31
%


39
%


22
%


29
%Net interest margin


7.78
%


1.22
%


1.48
%


1.93
%MBR margin


1.28
%


N/A



N/A



1.42
%Efficiency ratio


21
%


3
%


5
%


15
%Operating DataLoan production

$
412,416


$



$



$
412,416Loans sold

$
437,331


$



$
2,845


$
440,176  56




---



##### Table of Contents



Specialty Commercial Loans Held for Sale and/or InvestmentWarehouse


CommercialSingle Spec


Subdivision


Lending


Lending


Total(Dollars in thousands)Three Months Ended
    June 30, 2007Operating ResultsNet interest income

$
2,852


$
15,470


$
1,778


$
34


$
20,134Provision for loan losses


(164
)


(1,000
)


(96
)






(1,260
)Gain (loss) on sale of loans














223



223Service fee income


















Gain (loss) on sale of securities


















Other income


857



314



775



26



1,972Net revenues (expense)


3,545



14,784



2,457



283



21,069Variable expenses


859



2,645







226



3,730Deferral of expenses under
    SFAS 91


(118
)


(2,148
)






(104
)


(2,370
)Fixed expenses


666



3,862



1,104



1,890



7,522Pretax income (loss)


2,138



10,425



1,353



(1,729
)


12,187Net income (loss)

$
1,302


$
6,349


$
824


$
(1,053
)

$
7,422Balance Sheet DataAverage interest-earning assets

$
216,142


$
1,241,967


$
298,703


$
13,728


$
1,770,540Allocated capital

$
19,250


$
110,709


$
24,296


$
605


$
154,860Performance RatiosROE


27
%


23
%


14
%


N/A



19
%Net interest margin


5.29
%


5.00
%


2.39
%


N/A



4.56
%Efficiency ratio


38
%


28
%


43
%


N/A



40
%Operating DataLoan production

$
74,433


$
472,978


$



$
44,787


$
592,198Loans sold

$



$



$



$



$
Three Months Ended
    June 30, 2006Operating ResultsNet interest income

$
3,597


$
15,809


$
728


$



$
20,134Provision for loan losses


(75
)


(250
)










(325
)Gain (loss) on sale of loans


















Service fee income


















Gain (loss) on sale of securities


















Other income


744



376



433







1,553Net revenues (expense)


4,266



15,935



1,161







21,362Variable expenses


688



2,704











3,392Deferral of expenses under
    SFAS 91


(77
)


(1,963
)










(2,040
)Fixed expenses


435



3,289



1,122







4,846Pretax income (loss)


3,220



11,905



39







15,164Net income (loss)

$
1,961


$
7,250


$
24


$



$
9,235Balance Sheet DataAverage interest-earning assets

$
250,906


$
1,077,306


$
94,938


$



$
1,423,150Allocated capital

$
22,545


$
105,365


$
9,331


$



$
137,241Performance RatiosROE


35
%


28
%


N/A



N/A



27
%Net interest margin


5.75
%


5.89
%


N/A



N/A



5.67
%Efficiency ratio


24
%


25
%


N/A



N/A



29
%Operating DataLoan production

$
49,711


$
530,995


$



$



$
580,706Loans sold

$



$



$



$



$
  57




---



##### Table of Contents



MortgageServicing


Banking


Deposit


Corporate(1)


Total Overhead(Dollars in thousands)Three Months Ended
    June 30, 2007Operating ResultsNet interest income

$
72


$
247


$
6,145


$
(3,446
)

$
3,018Provision for loan losses


















Gain (loss) on sale of loans


















Service fee income














566



566Gain (loss) on sale of securities


















Other income


864



77



1,104



42



2,087Net revenues (expense)


936



324



7,249



(2,838
)


5,671Variable expenses


















Deferral of expenses under
    SFAS 91


















Fixed expenses


6,557



11,263



12,752



27,752



58,324Pretax income (loss)


(5,621
)


(10,939
)


(5,503
)


(30,590
)


(52,653
)Net income (loss)

$
(3,423
)

$
(6,662
)

$
(3,351
)

$
(18,386
)

$
(31,822
)Balance Sheet DataAverage interest-earning assets

$



$
2,470


$
173


$
417,713


$
420,356Allocated capital

$
(587
)

$
16,783


$
1,984


$
162,869


$
181,049Performance RatiosROE


N/A



N/A



N/A



N/A



N/ANet interest margin


N/A



N/A



N/A



N/A



N/AEfficiency ratio


N/A



N/A



N/A



N/A



N/AOperating DataLoan production

$



$



$



$



$
Loans sold

$



$



$



$



$
Three Months Ended
    June 30, 2006Operating ResultsNet interest income

$
(40
)

$
508


$
3,313


$
(2,263
)

$
1,518Provision for loan losses


















Gain (loss) on sale of loans


















Service fee income














488



488Gain (loss) on sale of securities


















Other income


831



(106
)


883



(819
)


789Net revenues (expense)


791



402



4,196



(2,594
)


2,795Variable expenses


















Deferral of expenses under
    SFAS 91


















Fixed expenses


4,745



10,568



9,574



44,234



69,121Pretax income (loss)


(3,954
)


(10,166
)


(5,378
)


(46,828
)


(66,326
)Net income (loss)

$
(2,408
)

$
(6,191
)

$
(3,275
)

$
(28,821
)

$
(40,695
)Balance Sheet DataAverage interest-earning assets

$



$
3,291


$
176


$
813,696


$
817,163Allocated capital

$
13


$
10,917


$
2,154


$
229,993


$
243,077Performance RatiosROE


N/A



N/A



N/A



N/A



N/ANet interest margin


N/A



N/A



N/A



N/A



N/AEfficiency ratio


N/A



N/A



N/A



N/A



N/AOperating DataLoan production

$



$



$



$



$
Loans sold

$



$



$



$



$
     (1)
    
    Corporate overhead under the product profitability analysis is
    different from the corporate overhead under the business segment
    results as certain elimination items are included here. 58




---



##### Table of Contents



TABLE 2.
    S&P LIFETIME LOSS ESTIMATES



One method we use to evaluate the credit quality of our
    production is S&P Levels model. We believe this model
    provides another objective, third-party method to evaluate our
    production. The Levels model is the oldest licensed mortgage
    loss model in the industry, developed and tested over various
    economic cycles, and one of only two models accepted by the
    industry for evaluating securitizations.



The following summarizes the estimated lifetime losses for
    mortgage production using the S&P Levels model for the
    periods indicated: Three Months EndedJune 30, 2007


June 30, 2006


March 31, 2007(Dollars in millions)Total S&P average lifetime
    loss estimates


0.63
%


0.84
%


0.85
%Total S&P evaluated production

$
19,287


$
15,839


$
21,803     (1)
    
    While our production is evaluated using the S&P Levels
    model, the data are not audited or endorsed by S&P.
    S&P evaluated production excludes second liens, HELOC,
    reverse mortgages, and construction loans.   TABLE 3.
    PRODUCTION BY PRODUCT  FICO AND CLTV



The following table shows the average FICO and CLTV by portfolio
    for loans originated during the periods indicated: Three Months EndedJune 30, 2007


June 30, 2006


March 31, 2007(Dollars in millions)

Production


FICO


CLTV


Production


FICO


CLTV


Production


FICO


CLTVTotal production

$
23,023



N/A



N/A


$
20,591



N/A



N/A


$
25,930



N/A



N/ALess:Home equity line of
    credit(1)/Seconds


876



724



85
%


1,860



716



86
%


1,703



706



91
%Reverse mortgages


1,258



N/A



57
%


1,337



N/A



53
%


1,221



N/A



54
%Consumer construction(1)


1,084



724



74
%


1,024



724



77
%


842



722



76
%Commercial real estate


45



N/A



67
%






N/A







1



N/A



45
%Builder construction commitments(1)


473



N/A



70
%


531



N/A



82
%


360



N/A



75
%Total S&P evaluated production

$
19,287



705



78
%

$
15,839



702



80
%

$
21,803



704



80
%     (1)
    
    Amounts represent total commitments. 59




---



##### Table of Contents



TABLE 4.
    SFR MORTGAGE PRODUCTION AND PIPELINE BY PURPOSE As of and for the Three Months EndedJune 30,


June 30,


Percent


March 31,


Percent2007


2006


Change


2007


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

$
7,285


$
8,284



(12
)%

$
9,274



(21
)%Cash-out refinance transactions


10,577



9,373



13
%


11,226



(6
)%Rate/term refinance transactions


4,643



2,403



93
%


5,069



(8
)%Total single-family mortgage
    production

$
22,505


$
20,060



12
%

$
25,569



(12
)%% purchase and cash-out
    refinance transactions


79
%


88
%






80
%Mortgage industry market
    share


3.07
%


2.67
%


15
%


3.90
%


(21
)%Mortgage pipeline:Purchase transactions

$
5,003


$
4,459



12
%

$
5,278



(5
)%Cash-out refinance transactions


4,848



4,062



19
%


5,054



(4
)%Rate/term refinance transactions


2,979



1,492



100
%


2,512



19
%Total specific rate locks


12,830



10,013



28
%


12,844



0
%Non-specific rate locks on bulk
    purchases


546



2,514



(78
)%


3,268



(83
)%Total pipeline at period end(1)

$
13,376


$
12,527



7
%

$
16,112



(17
)%     (1)
    
    Total pipeline of loans in process includes rate lock
    commitments we have provided on loans that are specifically
    identified or non-specific bulk packages, and loan applications
    we have received for which the borrower has not yet locked in
    the interest rate commitment. Non-specific bulk packages
    represent pools of loans we have committed to purchase, where
    the pool characteristics are specified but the actual loans are
    not. TABLE 5.
    SFR MORTGAGE PRODUCTION BY AMORTIZATION TYPE Three Months EndedJune 30,


June 30,


March 31,2007


2006


2007SFR Mortgage Production by
    Amortization Type:Fixed-rate mortgages


24
%


20
%


25
%Intermediate term fixed-rate loans


7
%


7
%


7
%Interest-only loans


47
%


37
%


47
%Pay option ARMs


11
%


21
%


11
%Other ARMs


11
%


15
%


10
%100
%


100
%


100
%  60




---



##### Table of Contents



TABLE 6.
    SFR MORTGAGE PRODUCTION BY GEOGRAPHIC DISTRIBUTION Three Months EndedJune 30,


June 30,


March 31,2007


2006


2007Geographic
    distribution:California


45
%


44
%


45
%Florida


8
%


9
%


8
%New York


7
%


6
%


6
%New Jersey


4
%


4
%


4
%Arizona


3
%


3
%


3
%Other


33
%


34
%


34
%Total


100
%


100
%


100
%  TABLE 7.
    MBR MARGIN



The following table shows a reconciliation of gross MBR
    margin to net MBR margin in basis points for the periods
    indicated: ProductionSecondary


Total


Credit


Net MBRMBR


Net HFS


Market


Production


Costs/MBR


After


FAS 91Gross


Pipeline


After


Credit


Reserve


Credit


After


Production


Deferred


Net MBR(In Basis Points Unless Otherwise Noted)

Loans Sold


MBR


Hedging


Hedging(a)


Losses


Accrual


Costs(b)


Hedging (b/a)


Credit Costs


Cost


ReportedQuarter ended

(In millions)June 30, 2007


20,194



91



40



131



(18
)


(12
)


(30
)


23
%


101



(21
)


80June 30, 2006


19,415



196



(29
)


167



(13
)


(6
)


(19
)


12
%


148



(25
)


123March 31, 2007


24,537



112



(1
)


111



(10
)


(13
)


(23
)


21
%


88



(20
)


68  TABLE 8.
    SERVICING FEE INCOME



The components of service fee income for the Company are as
    follows: Three Months EndedJune 30,


BPS


June 30,


BPS


March 31,


BPS2007


UPB


2006


UPB


2007


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

$
182,175



45


$
117,787



45


$
164,875



45Change in value due to portfolio
    run-off


(106,003
)


(26
)


(88,261
)


(34
)


(117,781
)


(32
)Service fee income, net of change
    in value due to portfolio run-off


76,172



19



29,526



11



47,094



13Change in value due to application
    of external benchmarking policies


3,920



1



(12,289
)


(5
)






Valuation adjustment due to market
    changes


218,739



54



76,670



30



30,840



8Loss on financial instruments used
    to hedge MSRs


(213,213
)


(53
)


(66,660
)


(26
)


(28,747
)


(8
)Total service fee
    income

$
85,618



21


$
27,247



10


$
49,187



13   61




---



##### Table of Contents



Six Months EndedJune 30,


BPS


June 30,


BPS2007


UPB


2006


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

$
347,050



45


$
215,980



45Change in value due to portfolio
    run-off


(223,784
)


(29
)


(156,419
)


(33
)Service fee income, net of change
    in value due to portfolio run-off


123,266



16



59,561



12Change in value due to application
    of external benchmarking policies


3,920



1



(15,860
)


(3
)Valuation adjustment due to market
    changes


249,579



32



160,724



33Loss on financial instruments used
    to hedge MSRs


(241,960
)


(31
)


(146,289
)


(30
)Total service fee
    income

$
134,805



18


$
58,136



12  TABLE 9.
    MORTGAGE SERVICING RIGHTS ROLLFORWARD



The following table provides additional information on our
    activities in MSRs: Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in thousands)Balance at beginning of period

$
2,052,822


$
1,354,433


$
1,822,455


$
1,822,455


$
1,094,490Cumulative-effect adjustment due
    to change in accounting for MSRs


















17,561Net additions from loan sale or
    securitization


272,260



268,515



319,663



591,923



498,572Purchase or assumption


2,268



27







2,268



27Transfers to AAA-rated and agency
    interest-only and residual securities


(56,040
)










(56,040
)


Transfers due to
    clean-up
    calls and other


(889
)


(274
)


(2,355
)


(3,244
)


(274
)Change in fair value due to run-off


(106,003
)


(88,261
)


(117,781
)


(223,784
)


(156,419
)Change in fair value due to market
    changes


218,739



76,670



30,840



249,579



160,724Change in fair value due to
    application of external benchmarking policies


3,920



(12,289
)






3,920



(15,860
)Balance at end of period

$
2,387,077


$
1,598,821


$
2,052,822


$
2,387,077


$
1,598,821MSRs as basis points of unpaid
    principal balance


142



145



131



142



145  62




---



##### Table of Contents



TABLE 10.
    GAIN (LOSS) ON MORTGAGE-BACKED SECURITIES



The components of the Companys gain (loss) on
    mortgage-backed securities are as follows: Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in thousands)Net (loss) gain on
    securities:Realized loss on available for
    sale securities

$



$



$
(486
)

$
(486
)

$
Impairments on available for sale
    securities






(1,501
)


(2,057
)


(2,057
)


(1,936
)Unrealized (loss) gain on
    prepayment penalty securities


(21,658
)


10,909



(2,204
)


(23,862
)


4,657Unrealized gain on late fee
    securities


582











582



Unrealized (loss) gain on
    AAA-rated and agency interest-only and residual securities


(1,584
)


5,566



(1,145
)


(2,729
)


11,850Net (loss) gain on trading
    securities and other instruments used to hedge AAA-rated and
    agency interest-only and residual securities


(23,687
)


(6,716
)


545



(23,142
)


(8,928
)Total (loss) gain on securities,
    net

$
(46,347
)

$
8,258


$
(5,347
)

$
(51,693
)

$
5,643    TABLE 11.
    UNREALIZED GAINS AND LOSSES OF SECURITIES AVAILABLE FOR
    SALE



The following table summarizes the unrealized gains and losses
    of securities available for sale as of dates indicated: June 30,


June 30,


March 31,2007


2006


2007(Dollars in thousands)Amortized cost

$
4,564,495


$
4,363,388


$
4,643,722Gross unrealized holding gains


3,984



2,685



18,326Gross unrealized holding losses


(68,572
)


(84,584
)


(39,883
)Estimated fair value

$
4,499,907


$
4,281,489


$
4,622,165     As of June 30, 2007Less Than 12 Months


12 Months or Greater


TotalUnrealized





Unrealized





UnrealizedLosses


Fair Value


Losses


Fair Value


Losses


Fair Value(Dollars in thousands)Securities  available
    for sale:AAA-rated non-agency securities

$
(12,904
)

$
1,941,701


$
(47,430
)

$
1,390,385


$
(60,334
)

$
3,332,086AAA-rated agency securities


(1,160
)


23,644



(348
)


14,606



(1,508
)


38,250Other investment grade securities


(3,947
)


245,763



(959
)


27,763



(4,906
)


273,526Residual securities


(1,824
)


9,172











(1,824
)


9,172Total securities 
    available for sale

$
(19,835
)

$
2,220,280


$
(48,737
)

$
1,432,754


$
(68,572
)

$
3,653,034  63




---



##### Table of Contents



TABLE 12.
    OTHER INVESTMENT GRADE AND NON-INVESTMENT GRADE MORTGAGE-BACKED
    SECURITIES



The fair values of other investment grade and non-investment
    grade mortgage-backed securities by credit ratings follows: December 31,June 30, 2007


2006Current


Net DiscountFace


to Face


AmortizedValue


Value


Cost


Fair Value


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

$
7,445


$
(63
)

$
7,382


$
7,402


$
7,513AA


277,020



(3,053
)


273,967



271,638



86,311AA−


13,977



(337
)


13,640



13,674



14,138A+


4,000



(8
)


3,992



4,000



A


113,951



(5,171
)


108,780



108,084



2,160A−


13,650



(28
)


13,622



13,769



BBB+


1,810



(156
)


1,654



1,654



BBB


87,005



(10,496
)


76,509



75,848



20,734BBB−


77,368



(6,678
)


70,690



70,516



58,397Total other investment grade
    mortgage-backed securities

$
596,226


$
(25,990
)

$
570,236


$
566,585


$
189,253Non-investment grade
    mortgage-backed securities:BB+

$
41,168


$
(9,131
)

$
32,037


$
32,037


$
7,299BB


140,437



(33,329
)


107,108



107,528



49,856BB−


27,016



(2,980
)


24,036



24,036



21,170B


47,297



(33,221
)


14,076



14,644



1,442CCC+


1,851



(1,430
)


421



421



CCC


4,852



(3,860
)


991



991



C


579



(554
)


25



25



Other


34,266



(30,832
)


3,434



3,641



407Total other non-investment grade
    mortgage-backed securities

$
297,466


$
(115,337
)

$
182,128


$
183,323


$
80,174    64




---



##### Table of Contents



TABLE 13.
    OTHER RETAINED ASSETS



The carrying value of AAA-rated and agency interest-only,
    principal-only, prepayment penalty, residual and non-investment
    grade securities is evaluated by discounting estimated net
    future cash flows. For these securities, estimated net future
    cash flows are primarily based on assumptions related to
    prepayment speeds, in addition to expected credit loss
    assumptions on the residual securities. The models used for
    estimation are periodically tested against historical prepayment
    speeds and our valuations are benchmarked to external sources,
    where available. We also may retain certain other investment
    grade securities from our securitizations and to a lesser extent
    purchase from third parties to serve as hedges for our AAA-rated
    and agency interest-only securities. A summary of the activity
    of the retained assets follows: Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in thousands)AAA-rated and agency
    interest-only and other investment grade securities:Beginning balance

$
375,434


$
230,315


$
262,823


$
262,823


$
170,851Retained investments from
    securitizations


233,375



25,808



59,190



292,565



45,805Purchases


60,048



23,974



58,799



118,847



64,997Transfer from MSRs


56,040











56,040



Transfer to non-investment-grade
    securities


(4,163
)






(1,439
)


(5,602
)


Impairments










(182
)


(182
)


(183
)Sales


(16,644
)


(22,939
)






(16,644
)


(22,939
)Clean-up
    calls exercised






(107
)










(107
)Cash received, net of accretion


(6,097
)


(8,541
)


(7,072
)


(13,169
)


(15,571
)Valuation gains before hedges


4,859



3,808



3,315



8,174



9,465Ending balance

$
702,852


$
252,318


$
375,434


$
702,852


$
252,318Principal-only
    securities:Beginning balance

$
55,977


$
12,820


$
38,478


$
38,478


$
9,483Retained investments from
    securitizations


1,118



3,445



2,637



3,755



7,669Purchases


17,733



121,281



14,925



32,658



121,281Cash received, net of accretion


(785
)


(1,981
)


(364
)


(1,149
)


(1,974
)Valuation (losses) gains before
    hedges


(4,916
)


(5,614
)


301



(4,615
)


(6,508
)Ending balance

$
69,127


$
129,951


$
55,977


$
69,127


$
129,951Prepayment penalty
    securities:Beginning balance

$
93,106


$
66,949


$
97,576


$
97,576


$
75,741Retained investments from
    securitizations


9,883



13,466



8,105



17,988



22,057Transfer from MSRs/residual
    securities


1,076







163



1,239



Cash received, net of accretion


(6,677
)


(11,288
)


(10,534
)


(17,211
)


(22,419
)Valuation (losses) gains before
    hedges


(21,658
)


10,909



(2,204
)


(23,862
)


4,657Ending balance

$
75,730


$
80,036


$
93,106


$
75,730


$
80,036Late fee securities:Beginning balance

$



$



$



$



$
Retained investments from
    securitizations


12,175











12,175



Transfer from MSRs


135











135



Cash received, net of accretion


(9
)










(9
)


Valuation gains before hedges


582











582



Ending balance

$
12,883


$



$



$
12,883


$
Non-Investment-grade
    securities:Beginning balance

$
110,204


$
66,339


$
80,173


$
80,173


$
57,712Retained investments from
    securitizations


65,908



22,232



25,911



91,819



30,881Purchases


9,758







1,827



11,585



Transfer from investment-grade
    securities


4,163







1,439



5,602



Impairments






(202
)


(103
)


(103
)


(454
)Cash received, net of accretion


(969
)


(111
)


843



(126
)


96Valuation (losses) gain before
    hedges


(5,741
)


(213
)


114



(5,627
)


(190
)Ending balance

$
183,323


$
88,045


$
110,204


$
183,323


$
88,045 65




---



##### Table of Contents



Three Months Ended


Six Months EndedJune 30,


June 30,


March 31,


June 30,


June 30,2007


2006


2007


2007


2006(Dollars in thousands)Residual
    securities(1):Beginning balance

$
270,831


$
205,128


$
250,573


$
250,573


$
167,771Retained investments from
    securitizations, net(2)


13,397



43,933



23,707



37,104



85,809Transfer to prepayment penalty
    securities


(1,076
)










(1,076
)


Transfer due to
    clean-up
    calls and other










(5,615
)


(5,615
)


Impairments






(1,300
)


(1,770
)


(1,770
)


(1,300
)Clean-up
    calls exercised


(2,106
)










(2,106
)


Cash received, net of accretion


(7,565
)


(3,255
)


6,864



(701
)


(9,304
)Valuation losses before hedges


(13,609
)


(3,984
)


(2,928
)


(16,537
)


(2,454
)Ending balance

$
259,872


$
240,522


$
270,831


$
259,872


$
240,522     (1)
    
    Included in the residual securities balance at June 30,
    2007 were $9.2 million of HELOC residuals retained from two
    separate guaranteed mortgage securitization transactions. There
    was no gain on sale of loans recognized in connection with these
    transactions.(2)
    
    Amounts retained consist of 82% in subprime loans and 18% in
    HELOCs for the three months ended June 30, 2007. 66




---



##### Table of Contents



TABLE 14.
    VALUATION OF MSRs, INTEREST-ONLY, PREPAYMENT PENALTY, AND
    RESIDUAL SECURITIES



MSRs, AAA-rated and agency interest-only securities, prepayment
    penalty securities, and residual securities are recorded at fair
    market value. Prior to January 1, 2006, MSRs were subject
    to the lower of cost or market limitations. Relevant information
    and assumptions used to value these securities at as of dates
    indicated follows: Actual


Valuation AssumptionsGross Wtd.


Servicing


3-Month


Weighted


Lifetime


3-Month





RemainingBook


Collateral


Average


Fee/Interest


Prepayment


Average


Prepayment


Prepayment


Discount


CumulativeValue


Balance


Coupon


Strip


Speeds


Multiple


Speeds


Speeds


Yield


Loss Rate(1)(Dollars in thousands)June 30, 2007MSRs

$
2,387,077


$
167,710,148



7.06
%


0.35
%


17.7
%


4.12



20.6
%


19.1
%


8.7
%


N/AAAA-rated interest-only securities

$
136,267


$
5,860,016



6.57
%


0.74
%


17.5
%


3.14



19.6
%


18.5
%


12.7
%


N/APrepayment penalty securities

$
75,730


$
20,181,683



7.36
%


N/A



14.9
%


N/A



23.4
%


23.2
%


17.3
%


N/ALot loan residual securities


67,398


$
2,021,954



9.64
%


4.14
%


36.7
%


0.81



41.3
%


39.7
%


23.4
%


0.73
%HELOC residual securities


90,150


$
2,898,580



9.58
%


2.64
%


38.0
%


1.18



43.3
%


43.3
%


20.8
%


1.85
%Closed-end seconds residual
    securities


28,303


$
2,260,980



10.56
%


4.78
%


14.7
%


0.26



20.3
%


23.8
%


23.7
%


9.86
%Subprime residual securities


74,021


$
5,570,118



8.17
%


1.91
%


25.1
%


0.69



29.9
%


24.5
%


22.3
%


6.31
%Total non-investment grade residual
    securities

$
259,872June 30, 2006MSRs

$
1,598,821


$
109,988,858



6.70
%


0.37
%


18.5
%


3.98



22.1
%


20.5
%


10.2
%


N/AAAA-rated interest-only securities

$
64,373


$
4,512,539



6.61
%


0.41
%


12.6
%


3.47



13.5
%


16.4
%


15.0
%


N/APrepayment penalty securities

$
80,036


$
16,388,466



6.79
%


N/A



22.9
%


N/A



21.1
%


19.3
%


27.9
%


N/ALot loan residual securities


58,779


$
2,266,191



8.46
%


2.82
%


34.0
%


0.92



40.0
%


38.2
%


22.7
%


0.53
%HELOC residual securities


87,434


$
2,299,992



9.02
%


3.01
%


48.9
%


1.26



49.7
%


48.2
%


19.4
%


0.69
%Closed-end seconds residual
    securities


13,030


$
672,065



10.17
%


4.22
%


N/A



0.46



35.0
%


19.9
%


25.3
%


6.90
%Subprime residual securities


81,279


$
5,987,129



7.67
%


1.44
%


28.5
%


0.94



38.4
%


32.4
%


25.0
%


4.77
%Total non-investment grade residual
    securities

$
240,522March 31, 2007MSRs

$
2,052,822


$
156,144,082



7.09
%


0.36
%


18.4
%


3.63



26.3
%


25.2
%


8.1
%


N/AAAA-rated interest-only securities

$
74,720


$
6,152,269



6.63
%


0.50
%


21.1
%


2.43



21.6
%


21.2
%


12.5
%


N/APrepayment penalty securities

$
93,106


$
20,887,449



7.54
%


N/A



16.3
%


N/A



27.7
%


21.1
%


23.1
%


N/ALot loan residual securities


65,186


$
2,201,884



9.34
%


3.74
%


30.8
%


0.79



40.3
%


37.8
%


23.4
%


0.66
%HELOC residual securities


107,985


$
3,377,932



9.41
%


3.28
%


38.5
%


0.97



47.3
%


45.7
%


20.3
%


1.54
%Closed-end seconds residual
    securities


21,001


$
2,358,518



10.51
%


4.43
%


15.3
%


0.20



37.7
%


26.0
%


23.7
%


8.13
%Subprime residual securities


76,659


$
5,707,589



7.96
%


1.41
%


29.1
%


0.95



32.1
%


25.9
%


22.2
%


6.25
%Total non-investment grade residual
    securities

$
270,831     (1)
    
    As a percentage of the original pool balance, the actual
    cumulative loss rate to date totaled 0.79%, 0.93% and 0.62% for
    HELOC, closed-end seconds and subprime loans, respectively, at
    June 30, 2007. Loss incurred on lot loans as of
    June 30, 2007 was less than 0.003%.   67




---



##### Table of Contents



TABLE 15.
    DEPOSITS BY CHANNEL AND CATEGORY



The following table shows our deposits by channel as of periods
    indicated: June 30, 2007


June 30, 2006


December 31, 2006% of





% of





% ofTotal





Total





TotalAmount


Deposits


Amount


Deposits


Amount


Deposits(Dollars in thousands)Deposit ChannelBranch

$
6,025,269



51
%

$
4,206,638



45
%

$
5,211,365



48
%Internet


1,186,452



10
%


1,004,474



11
%


1,185,423



11
%Telebanking


1,421,553



12
%


1,171,650



13
%


1,290,595



12
%Money desk


2,358,802



20
%


2,351,336



25
%


2,593,719



24
%Custodial


754,578



7
%


617,773



6
%


616,904



5
%Total deposits

$
11,746,654



100
%

$
9,351,871



100
%

$
10,898,006



100
%  68




---



##### Table of Contents



June 30, 2007


June 30, 2006


December 31, 2006Amount


Rate


Amount


Rate


Amount


Rate(Dollars in thousands)Deposit CategoryNon-interest-bearing checking

$
78,362



0.0
%

$
68,988



0.0
%

$
72,081



0.0
%Interest-bearing checking


51,270



1.2
%


53,113



1.2
%


54,844



1.2
%Savings


2,348,224



4.9
%


1,606,540



4.5
%


1,915,333



5.0
%Custodial accounts


754,578



0.0
%


617,773



0.0
%


616,904



0.0
%Total core deposits


3,232,434



3.6
%


2,346,414



3.1
%


2,659,162



3.6
%Certificates of deposit


8,514,220



5.1
%


7,005,457



4.7
%


8,238,844



5.2
%Total deposits

$
11,746,654



4.7
%

$
9,351,871



4.3
%

$
10,898,006



4.8
%   ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    ITEM 4.
    CONTROLS
    AND PROCEDURES  Rules 13a-15 15d-15 Form 10-Q
   69




---



##### Table of Contents



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

(Dollars in thousands) June 30,


December 31,2007


2006(Unaudited)ASSETSCash and cash equivalents

$
617,689


$
541,725Securities classified as trading


1,107,988



542,731Securities classified as available
    for sale


4,499,907



4,900,514Loans held for sale


11,762,167



9,467,843Loans held for investment, net of
    allowance for loan losses of $76,856 and $62,386, respectively


8,570,708



10,114,823Mortgage servicing rights


2,387,077



1,822,455Other assets held for sale


54,785



Other assets


2,658,613



2,105,225Total assets

$
31,658,934


$
29,495,316LIABILITIES AND
    SHAREHOLDERS EQUITYLiabilitiesDeposits

$
11,746,654


$
10,898,006Advances from Federal Home Loan
    Bank


10,872,800



10,412,800Other borrowings


4,527,536



4,637,000Other liabilities


1,970,512



1,519,242Total liabilities


29,117,502



27,467,048Perpetual preferred stock in
    subsidiary


491,000



Shareholders EquityPreferred stock 
    authorized, 10,000,000 shares of $0.01 par value; none
    issued






Common stock 
    authorized, 200,000,000 shares of $0.01 par value;
    issued 102,137,187 shares and 102,258,939 shares at
    June 30, 2007 and December 31, 2006, respectively


1,021



1,023Additional
    paid-in-capital


1,595,333



1,597,814Accumulated other comprehensive
    loss


(47,323
)


(31,439
)Retained earnings


1,007,057



983,348Treasury stock


(505,656
)


(522,478
)Total shareholders equity


2,050,432



2,028,268Total liabilities and
    shareholders equity

$
31,658,934


$
29,495,316    70




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF EARNINGS

(Unaudited)

(Dollars in thousand, except per share data) For the Three Months


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006Interest incomeMortgage-backed and other
    securities

$
95,537


$
80,998


$
187,816


$
147,481Loans held for sale


289,262



181,079



541,419



354,640Loans held for investment


153,350



139,451



325,743



267,357Other


16,328



10,683



32,176



20,579Total interest income


554,477



412,211



1,087,154



790,057Interest expenseDeposits


138,618



92,840



270,685



167,083Advances from Federal Home Loan
    Bank


184,175



110,468



358,704



214,077Other borrowings


82,440



78,749



173,451



151,533Total interest expense


405,233



282,057



802,840



532,693Net interest income


149,244



130,154



284,314



257,364Provision for loan
    losses


17,204



2,230



27,891



6,052Net interest income after
    provision for loan losses


132,040



127,924



256,423



251,312Non-interest incomeGain on sale of loans


101,030



201,659



218,573



342,858Service fee income


85,618



27,247



134,805



58,136Loss (gain) on mortgage-backed
    securities


(46,347
)


8,258



(51,694
)


5,643Fee and other income


25,413



12,002



41,729



23,676Total non-interest income


165,714



249,166



343,413



430,313Net revenues


297,754



377,090



599,836



681,625Non-interest expense


224,455



203,814



440,635



375,714Earnings before provision for
    income taxes and minority interests


73,299



173,276



159,201



305,911Provision for income taxes


28,660



67,960



62,180



120,279Net earnings before minority
    interests


44,639



105,316



97,021



185,632Minority interests






657







1,124Net earnings

$
44,639


$
104,659


$
97,021


$
184,508Earnings per share:Basic

$
0.62


$
1.57


$
1.34


$
2.82Diluted

$
0.60


$
1.49


$
1.31


$
2.68Weighted-average shares
    outstanding:Basic


72,412



66,483



72,355



65,402Diluted


73,976



70,213



74,140



68,870Dividends declared per
    share

$
0.50


$
0.46


$
1.00


$
0.90    71




---



##### Table of Contents



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

(Unaudited)

(Dollars in thousands) AccumulatedAdditional


Other








TotalShares


Common


Paid-In-


Comprehensive


Retained


Treasury


ShareholdersOutstanding


Stock


Capital


Loss


Earnings


Stock


EquityBalance at December 31,
    2005


64,246,767


$
934


$
1,318,751


$
(15,157
)

$
759,330


$
(520,417
)

$
1,543,441Comprehensive income:Net earnings


















184,508







184,508Other comprehensive income (loss),
    net of tax:Net unrealized loss on
    mortgage-backed securities available for sale














(25,168
)










(25,168
)Net unrealized gain on derivatives
    used in cash flow hedges














15,484











15,484Total comprehensive income


























174,824Cumulative-effect adjustment due to
    change in accounting for MSRs


















10,624







10,624Issuance of common stock


1,747,675



18



73,408















73,426Exercises of common stock options


641,310



6



17,789















17,795Exercises of warrants


1,653,898



17



36,269















36,286Compensation expense for common
    stock options










4,963















4,963Net officers notes receivable
    payments










82















82Deferred compensation and
    restricted stock amortization, net of forfeitures


380,959



4



4,647















4,651Purchases of common stock


(50,401
)


















(2,006
)


(2,006
)Cash dividends


















(59,905
)






(59,905
)Balance at June 30,
    2006


68,620,208


$
979


$
1,455,909


$
(24,841
)

$
894,557


$
(522,423
)

$
1,804,181Balance at December 31,
    2006


73,017,356


$
1,023


$
1,597,814


$
(31,439
)

$
983,348


$
(522,478
)

$
2,028,268Comprehensive income:Net earnings


















97,021







97,021Other comprehensive income (loss),
    net of tax:Net unrealized loss on
    mortgage-backed securities available for sale














(20,874
)










(20,874
)Net unrealized gain on derivatives
    used in cash flow hedges














81











81Change in post retirement benefit
    plan














4,909











4,909Total comprehensive income


























81,137Exercises of common stock options


143,415



















3,540



3,540Exercises of warrants


63,888



1



1,405















1,406Compensation expense for common
    stock options










4,384















4,384Net officers notes receivable
    payments










306















306Deferred compensation and
    restricted stock amortization, net of forfeitures


479,557



(3
)


(8,576
)










14,776



6,197Purchases of common stock


(39,573
)


















(1,494
)


(1,494
)Cash dividends


















(73,312
)






(73,312
)Balance at June 30,
    2007


73,664,643


$
1,021


$
1,595,333


$
(47,323
)

$
1,007,057


$
(505,656
)

$
2,050,432    72




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands) For the Six MonthsEnded June 30,2007


2006Cash flows from operating
    activities:Net earnings

$
97,021


$
184,508Adjustments to reconcile net
    earnings to net cash used in operating activities:Gain on sale of loans


(218,573
)


(342,858
)Compensation expense related to
    stock options and restricted stocks


10,581



9,614Other amortization and depreciation


75,005



31,058Change in valuation of mortgage
    servicing rights, including amortization


(29,715
)


11,554Loss (gain) on mortgage-backed
    securities, net


51,694



(5,643
)Provision for loan losses


27,891



6,052Provision for deferred income taxes


62,180



158,111Net (increase) decrease in other
    assets and liabilities


(82,685
)


69,275Net cash (used in) provided by
    operating activities before activity for trading securities and
    loans held for sale


(6,601
)


121,671Net sales of trading securities


(236,436
)


32,242Net purchases and originations of
    loans held for sale


(2,778,764
)


(2,333,293
)Net cash used in operating
    activities


(3,021,801
)


(2,179,380
)Cash flows from investing
    activities:Net sales of and payments from
    loans held for investment


987,763



319,827Purchases of mortgage-backed
    securities available for sale


(428,851
)


(377,157
)Proceeds from sales of and
    principal payments from mortgage-backed securities available for
    sale


1,055,544



384,915Net increase in investment in
    Federal Home Loan Bank stock, at cost


(36,708
)


(22,475
)Net decrease in real estate
    investment


1,843



702Net purchases of property, plant
    and equipment


(41,780
)


(47,654
)Net cash provided by investing
    activities


1,537,811



258,158Cash flows from financing
    activities:Net increase in deposits


847,296



1,678,082Net increase in advances from
    Federal Home Loan Bank


460,000



116,800Net decrease in borrowings


(150,520
)


(306,685
)Net proceeds from issuance of
    common stock






73,426Net proceeds from issuance of trust
    preferred securities


30,000



90,000Redemption of trust preferred
    securities


(48,268
)


Net proceeds from stock options,
    warrants and notes receivable


5,252



54,163Proceeds from issuance of preferred
    stock by subsidiary


491,000



Cash dividends paid


(73,312
)


(59,905
)Purchases of common stock


(1,494
)


(2,006
)Net cash provided by financing
    activities


1,559,954



1,643,875Net increase (decrease) in cash and
    cash equivalents


75,964



(277,347
)Cash and cash equivalents at
    beginning of period


541,725



442,525Cash and cash equivalents at end of
    period

$
617,689


$
165,178Supplemental cash flow
    information:Cash paid for interest

$
666,777


$
517,197Cash paid (received) for income
    taxes

$
996


$
(48,905
)Supplemental disclosure of
    non-cash investing and financing activities:Net transfer of loans held for sale
    to loans held for investment

$
588,965


$
840,902Net transfer of mortgage servicing
    rights to trading securities

$
56,338


$
    73




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 June 30, 2007
 (Unaudited)
  NOTE 1 
    BASIS OF
    PRESENTATION    Form 10-Q Rule 10-01 Regulation S-X.
  10-K.
  NOTE 2 
    ACQUISITION    NOTE 3 
    NEWLY
    ADOPTED AND NEW ACCOUNTING PRONOUNCEMENTS  Accounting
    for Uncertainty in Income Taxes Accounting for Income
    Taxes.
 74




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value Measurements
  The Fair Value Option for Financial Assets and
    Financial Liabilities
  No. FIN 39-1, Amendment of FASB Interpretation No. 39 (FSP 39-1). FSP 39-1 Offsetting of Amounts
    Related to Certain Contracts FSP 39-1 FSP 39-1 FSP 39-1, FSP 39-1 FSP 39-1
  NOTE 4 
    SEGMENT
    REPORTING   75




---



##### Table of Contents



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


Mortgage








TotalDivisions


Servicing


Thrift


Other


Company(Dollars in thousands)Three months ended June 30,
    2007Net interest income (expense)

$
61,347


$
(7,414
)

$
71,699


$
23,612


$
149,244Net revenues (expense)


175,646



73,127



53,232



(4,251
)


297,754Net earnings (loss)


38,308



31,908



15,495



(41,072
)


44,639Allocated average capital


735,268



348,360



897,521



96,425



2,077,574Assets as of June 30, 2007

$
9,559,141


$
4,170,909


$
16,560,383


$
1,368,501


$
31,658,934Return on equity


21
%


37
%


7
%


N/A



9
%Three months ended June 30,
    2006Net interest income (expense)

$
37,650


$
(221
)

$
76,780


$
15,945


$
130,154Net revenues (expense)


234,117



43,824



99,711



(562
)


377,090Net earnings (loss)


85,638



19,612



43,258



(43,849
)


104,659Allocated average capital


521,875



253,768



776,126



190,468



1,742,237Assets as of June 30, 2006

$
5,418,369


$
2,474,469


$
14,683,064


$
1,180,540


$
23,756,442Return on equity


66
%


31
%


22
%


N/A



24
%Six months ended June 30,
    2007Net interest income (expense)

$
111,109


$
(12,466
)

$
141,519


$
44,152


$
284,314Net revenues (expense)


343,658



132,797



128,181



(4,800
)


599,836Net earnings (loss)


82,343



56,813



45,440



(87,575
)


97,021Allocated average capital


707,691



340,267



874,874



132,527



2,055,359Assets as of June 30, 2007

$
9,559,141


$
4,170,909


$
16,560,383


$
1,368,501


$
31,658,934Return on equity


23
%


34
%


10
%


N/A



10
%Six months ended June 30,
    2006Net interest income (expense)

$
80,901


$
(3,517
)

$
152,442


$
27,538


$
257,364Net revenues (expense)


416,627



73,103



198,310



(6,415
)


681,625Net earnings (loss)


150,193



31,273



88,694



(85,652
)


184,508Allocated average capital


516,384



225,667



751,930



176,290



1,670,271Assets as of June 30, 2006

$
5,418,369


$
2,474,469


$
14,683,064


$
1,180,540


$
23,756,442Return on equity


59
%


28
%


24
%


N/A



22
%   NOTE 5 
    STOCK-BASED
    COMPENSATION   76




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007

2006Expected volatility

28.68-30.20%

28.11-28.44%Expected dividends

5.08-6.76%

4.00-4.60%Weighted average expected term (in
    years)

5.20-5.50

6.89-7.34Risk-free rate

4.58-4.82%

4.54-4.73%     For the Three Months Ended June 30,


For the Six Months Ended June 30,2007


2006


2007


2006(Dollars in thousands except per share data)Stock option compensation cost,
    before tax

$
1,790


$
2,449


$
4,384


$
4,963Stock option compensation cost,
    after tax


1,156



1,263



2,794



2,918Effect on basic earnings per share


0.02



0.02



0.04



0.04Effect on dilutive earnings per
    share


0.02



0.02



0.04



0.04           Six Months EndedThree Months Ended June 30, 2007


June 30, 2007Weighted-





Weighted-Average





AverageGrant-Date





Grant-DateShares


Fair Value


Shares


Fair ValueRestricted Stock:Nonvested, beginning of period


1,194,353


$
36.11



889,117


$
39.14Granted


83,675



30.74



538,807



30.69Vested


(8,611
)


39.05



(142,205
)


37.48Canceled and forfeited


(43,046
)


37.12



(59,348
)


37.68Nonvested, end of period


1,226,371



35.69



1,226,371



35.69    77




---



##### Table of Contents



INDYMAC
    BANCORP, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 6 
    DEFINED
    BENEFIT PENSION PLAN      NOTE 7 
    PERPETUAL
    NON-CUMULATIVE PREFERRED STOCK      NOTE 8 
    SUBSEQUENT
    EVENTS       78




---



##### Table of Contents



PART II.
    OTHER INFORMATION  ITEM 1.
    LEGAL
    PROCEEDINGS  Accounting for
    Contingencies
  ITEM 1A.
    RISK
    FACTORS  10-K
  Significant
    illiquidity, volatility and spread widening (i.e., an increase
    in credit risk premiums required by investors between mortgage
    backed securities and comparable duration Treasury securities)
    in the secondary markets could have a material adverse impact on
    our mortgage production earnings and the earnings of the Company
    overall.
       79




---



##### Table of Contents



ITEM 2.
    UNREGISTERED
    SALES OF EQUITY SECURITIES AND USE OF PROCEEDS    Total Number of


Maximum ApproximateTotal





Shares Purchased


Dollar Value (In Million) ofNumber of


Weighted


as Part of Publicly


Shares that may yet beShares


Average Price


Announced Plans or


Purchased Under thePurchased(1)


Paid per Share


Programs


Plans or Programs(2)Calendar Month:April 2007


1,279


$
30.90






$
300May 2007


1,017



30.80







300June 2007














300Total


2,296


$
30.85







300     (1)
    
    All shares purchased during the periods indicated represent
    withholding of a portion of shares to cover taxes in connection
    with vesting of restricted stocks or exercise of stock options.(2)
    
    Our Board of Directors previously approved a $500 million
    share repurchase program. Since its inception in 1999, we have
    repurchased a total of 28.0 million shares through this
    program. In January 2007, we obtained an authorization from the
    Board of Directors to repurchase an additional
    $236.4 million of common stock for a total current
    authorization of up to $300 million.  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS    Shares for


Shares WithheldMichael W. Perry


64,439,188



1,922,680Louis E. Caldera


64,762,491



1,599,377Lyle E. Gramley


64,767,414



1,594,454Hugh M. Grant


64,750,260



1,611,608Patrick C. Haden


64,781,939



1,579,929Terrance G. Hodel


64,786,037



1,575,831Robert L. Hunt II


64,785,237



1,576,631Lydia H. Kennard


64,778,480



1,583,388Senator John Seymour (ret.)


62,528,311



3,833,557Bruce G. Willison


64,756,892



1,604,976     Number ofVotes CastFor


65,847,498Against


456,131Abstain


58,240  80




---



##### Table of Contents



ITEM 6.
    EXHIBITS  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.  81




---



##### Table of Contents



SIGNATURE
       By:
    /s/  MICHAEL
    W. PERRY    Chairman of the Board of Directors
    and Chief Executive Officer
  By:
    /s/  A.
    SCOTT KEYS    Executive Vice President
 and Chief Financial Officer
 82