##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

|       |  |                                                                                        
|------ |  | ---------------------------------------------------------------------------------------
|(XBOX) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the period ended March 31, 2002

OR

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|(BOX) |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _____________ to ______________

Commission File Number 1-8972

INDYMAC BANCORP, INC.

(Exact name of registrant as specified in its charter)


|                                                               |  |                                       
|-------------------------------------------------------------- |  | --------------------------------------
|DELAWARE                                                       |  | 95-3983415                            
|                                                              
|                                                              
|                                                              
|                                                              
|(State or other jurisdiction of incorporation or organization) |  | (I. R. S. Employer Identification No.)
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  |                                       
|                                                              
|                                                              
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|155 NORTH LAKE AVENUE, PASADENA, CALIFORNIA                    |  | 91101-7211                            
|                                                              
|                                                              
|                                                              
|                                                              
|(Address of principal executive offices)                       |  | (Zip Code)                            

Registrants telephone number, including area code (800) 669-2300

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

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

Common stock outstanding as of April 30, 2002: 60,614,817 shares

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TABLE OF CONTENTS



|             |                                                                                               |                                                                          |  |  |  |  |  | 
|------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ |  |  |  |  |  | 
|             |                                                                                               | CONSOLIDATED BALANCE SHEETS                                             
|             |                                                                                               | CONSOLIDATED STATEMENTS OF EARNINGS                                     
|             |                                                                                               | CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
|             |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                                   
|             |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                              
|             | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|             | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                            
|PART II     
|             | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES  
|EXHIBIT 10.1



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##### Table of Contents



INDYMAC BANCORP, INC.
FORM 10-Q QUARTERLY REPORT
FOR THE PERIOD ENDED MARCH 31, 2002

TABLE OF CONTENTS

|                                                                    |  |                                                                          |                           |  |      |    | 
|------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ------------------------- |  | ---- | -- | 
|                                                                    |  |                                                                          |                           |  | Page
|                                                                    |  |                                                                          |                           |  |     
|PART I. FINANCIAL INFORMATION                                       |  |                                                                          |                           | 
|                                                                   
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|                                                                    |  |                                                                          |                           | 
|                                                                   
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|                                                                   
|Item 1. Financial Statements (Unaudited)                            |  |                                                                          |                           | 
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|                                                                    |  | Consolidated Balance Sheets                                              |                           |  | 3    |   
|                                                                   
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|                                                                    |  | Consolidated Statements of Earnings                                      |                           |  | 4    |   
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|                                                                    |  | Consolidated Statements of Shareholders Equity and Comprehensive Income |                           |  | 5    |   
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|                                                                    |  | Consolidated Statements of Cash Flows                                    |                           |  | 6    |   
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|                                                                    |  | Notes to Consolidated Financial Statements                               |                           |  | 7    |   
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|Item 2. Managements Discussion and Analysis of Financial Condition |  |                                                                          |                           | 
|                                                                   
|                                                                   
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|                                                                    |  |                                                                          | and Results of Operations |  |      | 10 | 
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|Item 3. Quantitative and Qualitative Disclosure of Market Risk      |  |                                                                          | 28                        | 
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|PART II. OTHER INFORMATION                                          |  |                                                                          |                           | 
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|Item 6. Exhibits and Reports on Form 8-K                            |  |                                                                          | 30                        | 

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##### Table of Contents






INDYMAC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |           |   |           | 
|--------------------------------------------------------------------- | ---------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------- | --------- | ----------- | --------- | ------------ | --------- | - | --------- | 
|                                                                      |                                                                                    |   |                                                                                           |           | March 31,   |           | December 31,
|                                                                      |                                                                                    |   |                                                                                           |           | 2002        |           | 2001        
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |             
|                                                                      |                                                                                    |   |                                                                                           |           | (Unaudited) |           |              |           |  
|Assets                                                                |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Cash and cash equivalents                                             |                                                                                    | $ | 383,645                                                                                   |           |             | $         | 153,295      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Mortgage-backed securities classified as trading securities           |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | ($160.2 million and $182.5 million pledged as collateral for repurchase agreements |   |                                                                                           |           |             |           |              |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | at March 31, 2002 and December 31, 2001, respectively)                             |   |                                                                                           | 313,921   |             |           |              | 215,200   |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Mortgage-backed securities available for sale, amortized cost of      |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | $1,410,658 and $1,350,721, respectively ($260.1 million and $81.6 million          |   |                                                                                           |           |             |           |              |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | pledged as collateral for repurchase agreements at March 31, 2002 and December     |   |                                                                                           |           |             |           |              |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | 31, 2001, respectively)                                                            |   |                                                                                           | 1,404,734 |             |           |              | 1,349,159 |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Loans receivable:                                                     |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Loans held for sale                                                                |   |                                                                                           |           |             |           |              |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | Prime                                                                                     |           |             | 1,081,885 |              |           |   | 1,940,213 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | Subprime                                                                                  |           |             | 243,562   |              |           |   | 140,550   | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Loans held for investment                                                          |   |                                                                                           |           |             |           |              |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | Mortgage                                                                                  |           |             | 1,512,941 |              |           |   | 1,531,757 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | Builder construction                                                                      |           |             | 525,883   |              |           |   | 596,273   | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | Consumer construction                                                                     |           |             | 748,527   |              |           |   | 725,200   | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | Income property                                                                           |           |             | 78,410    |              |           |   | 58,616    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | HELOC                                                                                     |           |             | 123,087   |              |           |   | 84,511    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Allowance for loan losses                                                          |   |                                                                                           | (56,902   | )           |           |              | (57,700   | )
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                      |                                                                                    |   | Total loans receivable ($1.2 billion and $2.0 billion pledged                             |           |             |           |              |           |   |           | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | as collateral for repurchase agreements at March 31, 2002 and                             |           |             |           |              |           |   |           | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | December 31, 2001, respectively)                                                          |           |             | 4,257,393 |              |           |   | 5,019,420 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Mortgage servicing rights                                             |                                                                                    |   | 390,131                                                                                   |           |             |           | 321,316      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Investment in Federal Home Loan Bank stock, at cost                   |                                                                                    |   | 105,709                                                                                   |           |             |           | 99,996       |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Interest receivable                                                   |                                                                                    |   | 46,496                                                                                    |           |             |           | 52,172       |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Goodwill and other intangible assets                                  |                                                                                    |   | 35,337                                                                                    |           |             |           | 35,637       |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Foreclosed assets                                                     |                                                                                    |   | 16,133                                                                                    |           |             |           | 19,372       |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other assets                                                          |                                                                                    |   | 213,770                                                                                   |           |             |           | 231,744      |          
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                      | Total assets                                                                       |   | $                                                                                         | 7,167,269 |             |           | $            | 7,497,311 |  
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |          
|Liabilities
and Shareholders Equity                                  |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Deposits                                                              |                                                                                    | $ | 3,113,949                                                                                 |           |             | $         | 3,238,864    |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Advances
from Federal Home Loan Bank                                  |                                                                                    |   | 2,080,700                                                                                 |           |             |           | 1,999,378    |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Trust preferred securities                                            |                                                                                    |   | 116,418                                                                                   |           |             |           | 116,287      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other borrowings                                                      |                                                                                    |   | 736,283                                                                                   |           |             |           | 1,053,670    |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Other liabilities                                                     |                                                                                    |   | 235,758                                                                                   |           |             |           | 243,974      |          
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                      | Total liabilities                                                                  |   |                                                                                           | 6,283,108 |             |           |              | 6,652,173 |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Shareholders Equity                                                  |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Preferred Stock  authorized, 10,000,000 shares of $0.01 par value;                |   |                                                                                           |           |             |           |              |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | none issued                                                                               |           |             |          |              |           |   |          | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Common stock  authorized, 200,000,000 shares of $0.01 par                         |   |                                                                                           |           |             |           |              |           |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | value; issued 83,485,865 shares (60,530,950 outstanding) at                               |           |             |           |              |           |   |           | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                    |   | March 31, 2002 and issued 83,312,516 shares
(60,366,266 outstanding) at December 31, 2001 |           |             | 835       |              |           |   | 833       | 
|Additional paid-in-capital                                            |                                                                                    |   | 1,000,258                                                                                 |           |             |           | 996,649      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Accumulated other comprehensive income                                |                                                                                    |   | 168                                                                                       |           |             |           | 570          |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Retained earnings                                                     |                                                                                    |   | 270,333                                                                                   |           |             |           | 234,314      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Treasury stock, 22,954,915 shares and 22,946,250 shares, respectively |                                                                                    |   | (387,433                                                                                  | )         |             |           | (387,228     | )        
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                      | Total shareholders equity                                                         |   |                                                                                           | 884,161   |             |           |              | 845,138   |  
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |          
|                                                                      | Total liabilities and shareholders equity                                         |   | $                                                                                         | 7,167,269 |             |           | $            | 7,497,311 |  
|                                                                      |                                                                                    |   |                                                                                           |           |             |           |              |          

The accompanying notes are an integral part of these statements.

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##### Table of Contents






INDYMAC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share data)
(Unaudited)

|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |         |         | 
|---------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------------------------- | ------ | -------------------- | ------- | ---- | ------ | ------- | ------- | 
|                                                                                                     |                                                       |                                                                       |        | For
the Three Months
|                                                                                                     |                                                       |                                                                       |        | Ended
March 31,     
|                                                                                                     |                                                       |                                                                       |        |                     
|                                                                                                     |                                                       |                                                                       |        | 2002                 |         | 2001
|                                                                                                     |                                                       |                                                                       |        |                      |         |     
|Interest
income                                                                                      |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Mortgage-backed and other securities                                                                 |                                                       | $                                                                     | 28,882 |                      |         | $    | 31,559 |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Loans held for sale                                                                                  |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Prime                                                 |                                                                       |        | 33,327               |         |      |        | 32,512  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Subprime                                              |                                                                       |        | 3,416                |         |      |        | 5,416   |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Loans held for investment                                                                            |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Mortgage                                              |                                                                       |        | 29,594               |         |      |        | 35,870  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Builder construction                                  |                                                                       |        | 10,293               |         |      |        | 15,012  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Consumer construction                                 |                                                                       |        | 13,977               |         |      |        | 8,713   |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Income property                                       |                                                                       |        | 1,106                |         |      |        | 1,326   |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | HELOC                                                 |                                                                       |        | 1,305                |         |      |        |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Other                                                                                                |                                                       |                                                                       | 1,782  |                      |         |      | 1,552  |        
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     | Total interest income                                 |                                                                       |        | 123,682              |         |      |        | 131,960 |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Interest expense                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Deposits                                                                                             |                                                       |                                                                       | 31,308 |                      |         |      | 14,474 |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Advances from Federal Home Loan Bank                                                                 |                                                       |                                                                       | 24,389 |                      |         |      | 22,416 |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Trust preferred securities                                                                           |                                                       |                                                                       | 2,756  |                      |         |      |       |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Other borrowings                                                                                     |                                                       |                                                                       | 11,475 |                      |         |      | 52,013 |        
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     | Total interest expense                                |                                                                       |        | 69,928               |         |      |        | 88,903  |        
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     | Net interest income                                   |                                                                       |        | 53,754               |         |      |        | 43,057  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Provision for loan losses                                                                            |                                                       |                                                                       | 4,186  |                      |         |      | 9,000  |        
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     | Net interest income after provision for loan losses   |                                                                       |        | 49,568               |         |      |        | 34,057  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Other
income                                                                                         |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Gain on sale of loans                                 |                                                                       |        | 77,466               |         |      |        | 49,199  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Service fee income                                    |                                                                       |        | 7,822                |         |      |        | 11,462  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Loss on mortgage-backed securities, net               |                                                                       |        | (6,988               | )       |      |        | (2,487  | )      
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Fee and other income                                  |                                                                       |        | 13,609               |         |      |        | 10,947  |        
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     |                                                       | Total other income                                                    |        |                      | 91,909  |      |        |         | 69,121  | 
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     |                                                       | Net revenues                                                          |        |                      | 141,477 |      |        |         | 103,178 | 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Other
expense                                                                                        |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Operating expenses                                    |                                                                       |        | 79,554               |         |      |        | 59,065  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Amortization of goodwill and other intangible assets  |                                                                       |        | 299                  |         |      |        | 960     |        
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     |                                                       | Total other expense                                                   |        |                      | 79,853  |      |        |         | 60,025  | 
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|Earnings before provision for income taxes and cumulative effect of a
change in accounting principle |                                                       |                                                                       | 61,624 |                      |         |      | 43,153 |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Provision for income taxes                            |                                                                       |        | 25,605               |         |      |        | 17,930  |        
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     |                                                       | Earnings before cumulative effect of a change in accounting principle |        |                      | 36,019  |      |        |         | 25,223  | 
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Cumulative effect of a change in accounting principle |                                                                       |        |                     |         |      |        | (10,185 | )      
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                     |                                                       | Net
earnings                                                          |        | $                    | 36,019  |      |        | $       | 15,038  | 
|                                                                                                     |                                                       |                                                                       |        |                      |         |      |        |        
|Earnings
per share before cumulative effect of a change in accounting
principle                      |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Basic                                                 |                                                                       | $      | 0.60                 |         |      | $      | 0.41    |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Diluted                                               |                                                                       | $      | 0.58                 |         |      | $      | 0.39    |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Earnings
per share from cumulative effect of a change in accounting
principle                        |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Basic                                                 |                                                                       | $      |                     |         |      | $      | (0.16   | )      
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Diluted                                               |                                                                       | $      |                     |         |      | $      | (0.16   | )      
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Net earnings per share                                                                               |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Basic                                                 |                                                                       | $      | 0.60                 |         |      | $      | 0.24    |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Diluted                                               |                                                                       | $      | 0.58                 |         |      | $      | 0.23    |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|Weighted
average shares outstanding                                                                  |                                                       |                                                                       |        |                      |         |      |        |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Basic                                                 |                                                                       |        | 60,228               |         |      |        | 62,193  |        
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                    
|                                                                                                     | Diluted                                               |                                                                       |        | 62,043               |         |      |        | 64,615  |        

The accompanying notes are an integral part of these statements.

-4-



---



##### Table of Contents






INDYMAC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)

|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |         |   | 
|----------------------------------------------------------- |  |  | ----------- | - | ------ | - | ------- |  | ------------- | - | ---------- | - | ------------- | - | ----------- | - | ------------- | - | ------- |  |  | - | ------ | - | ----- | - | -------- | - |  | - | ------- | - | 
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   | Accumulated |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |        
|                                                            |  |  |             |   |        |   |         |  |               |   | Additional |   | Other         |   |             |   |               |   | Total   |  |  |   |        |   | Total
|                                                            |  |  | Shares      |   | Common |   | Paid-in |  | Comprehensive |   | Cumulative |   | Comprehensive |   | Treasury    |   | Shareholders
|                                                            |  |  | Outstanding |   | Stock  |   | Capital |  | Income (Loss) |   | Earnings   |   | Income        |   | Stock       |   | Equity       
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |              
|Balance at December 31, 2000                                |  |  | 62,176,316  |   |        | $ | 818     |  |               | $ | 920,205    |   |               | $ | (2,603      | ) |               | $ | 117,926 |  |  |   |        |   |       | $ | (308,453 | ) |  | $ | 727,893 |  
|                                                           
|                                                           
|                                                           
|                                                           
|Common stock options exercised                              |  |  | 848,038     |   |        |   | 8       |  |               |   | 12,688     |   |               |   |            |   |               |   |        |  |  | $ |       |   |       |   |         |   |  |   | 12,696  |  
|                                                           
|                                                           
|                                                           
|                                                           
|Directors
and officers notes receivable                   |  |  |            |   |        |   |        |  |               |   | (26        | ) |               |   |            |   |               |   |        |  |  |   |       |   |       |   |         |   |  |   | (26     | )
|                                                           
|                                                           
|                                                           
|                                                           
|Deferred
compensation, restricted stock                     |  |  | 15,467      |   |        |   |        |  |               |   | 525        |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   |         |   |  |   | 525     |  
|                                                           
|                                                           
|                                                           
|                                                           
|401(k) contribution                                         |  |  | 16,739      |   |        |   |        |  |               |   | 445        |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   |         |   |  |   | 445     |  
|                                                           
|                                                           
|                                                           
|                                                           
|Net
gain on mortgage securities available for sale          |  |  |            |   |        |   |        |  |               |   |           |   |               |   | 9,973       |   |               |   |        |  |  |   | 9,973  |   |       |   |         |   |  |   | 9,973   |  
|                                                           
|                                                           
|                                                           
|                                                           
|Dividend reinvestment plan                                  |  |  | 224         |   |        |   |        |  |               |   | 9          |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   |         |   |  |   | 9       |  
|                                                           
|                                                           
|                                                           
|                                                           
|Purchases of common stock                                   |  |  | (523,118    | ) |        |   |        |  |               |   |           |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   | (13,401  | ) |  |   | (13,401 | )
|                                                           
|                                                           
|                                                           
|                                                           
|Net earnings                                                |  |  |            |   |        |   |        |  |               |   |           |   |               |   |            |   |               |   | 15,038  |  |  |   | 15,038 |   |       |   |         |   |  |   | 15,038  |  
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |         |  
|Net change                                                  |  |  | 357,350     |   |        |   | 8       |  |               |   | 13,641     |   |               |   | 9,973       |   |               |   | 15,038  |  |  | $ | 25,011 |   |       |   | (13,401  | ) |  |   | 25,259  |  
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |         |  
|Balance at March 31, 2001                                   |  |  | 62,533,666  |   |        | $ | 826     |  |               | $ | 933,846    |   |               | $ | 7,370       |   |               | $ | 132,964 |  |  |   |        |   |       | $ | (321,854 | ) |  | $ | 753,152 |  
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |         |  
|Balance at December 31, 2001                                |  |  | 60,366,266  |   |        | $ | 833     |  |               | $ | 996,649    |   |               | $ | 570         |   |               | $ | 234,314 |  |  |   |        |   |       | $ | (387,228 | ) |  | $ | 845,138 |  
|                                                           
|                                                           
|                                                           
|                                                           
|Common stock options exercised                              |  |  | 161,224     |   |        |   | 2       |  |               |   | 3,172      |   |               |   |            |   |               |   |        |  |  | $ |       |   |       |   |         |   |  |   | 3,174   |  
|                                                           
|                                                           
|                                                           
|                                                           
|Directors
and officers notes receivable                   |  |  |            |   |        |   |        |  |               |   | 18         |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   |         |   |  |   | 18      |  
|                                                           
|                                                           
|                                                           
|                                                           
|Deferred compensation, restricted stock                     |  |  | 11,526      |   |        |   |        |  |               |   | 404        |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   |         |   |  |   | 404     |  
|                                                           
|                                                           
|                                                           
|                                                           
|Net loss on mortgage securities available for sale          |  |  |            |   |        |   |        |  |               |   |           |   |               |   | (2,995      | ) |               |   |        |  |  |   | (2,995 | ) |       |   |         |   |  |   | (2,995  | )
|                                                           
|                                                           
|                                                           
|                                                           
|Net unrealized gain on derivatives used in cash flow hedges |  |  |            |   |        |   |        |  |               |   |           |   |               |   | 2,593       |   |               |   |        |  |  |   | 2,593  |   |       |   |         |   |  |   | 2,593   |  
|                                                           
|                                                           
|                                                           
|                                                           
|Dividend reinvestment plan                                  |  |  | 599         |   |        |   |        |  |               |   | 15         |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   |         |   |  |   | 15      |  
|                                                           
|                                                           
|                                                           
|                                                           
|Purchases of common stock                                   |  |  | (8,665      | ) |        |   |        |  |               |   |           |   |               |   |            |   |               |   |        |  |  |   |       |   |       |   | (205     | ) |  |   | (205    | )
|                                                           
|                                                           
|                                                           
|                                                           
|Net earnings                                                |  |  |            |   |        |   |        |  |               |   |           |   |               |   |            |   |               |   | 36,019  |  |  |   | 36,019 |   |       |   |         |   |  |   | 36,019  |  
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |         |  
|Net change                                                  |  |  | 164,684     |   |        |   | 2       |  |               |   | 3,609      |   |               |   | (402        | ) |               |   | 36,019  |  |  | $ | 35,617 |   |       |   | (205     | ) |  |   | 39,023  |  
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |         |  
|Balance at March 31, 2002                                   |  |  | 60,530,950  |   |        | $ | 835     |  |               | $ | 1,000,258  |   |               | $ | 168         |   |               | $ | 270,333 |  |  |   |        |   |       | $ | (387,433 | ) |  | $ | 884,161 |  
|                                                            |  |  |             |   |        |   |         |  |               |   |            |   |               |   |             |   |               |   |         |  |  |   |        |   |       |   |          |   |  |   |         |  

The accompanying notes are an integral part of these statements.

-5-



---



##### Table of Contents






INDYMAC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |          |            |          |  
|---------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ---------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | -------- | -------------------- | ------- | -------- | -------- | ---------- | -------- | -
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          | For
the Three Months
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          | Ended
March 31,     
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                     
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          | 2002                 |         | 2001    
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |         
|Cash flows from operating activities:                                  |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net earnings                                                                                  |                                                              | $                                                          | 36,019                                                                                                   |          |                      | $       | 15,038   |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Amortization of securities and mortgage servicing rights   |                                                                                                          |          | 10,117               |         |          |          | 44,116     |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Other depreciation and amortization                        |                                                                                                          |          | 4,631                |         |          |          | 3,775      |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Gain on sale of loans                                      |                                                                                                          |          | (77,466              | )       |          |          | (49,199    | )       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Loss on mortgage-backed securities, net                    |                                                                                                          |          | 6,988                |         |          |          | 2,487      |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Provision for loan losses                                  |                                                                                                          |          | 4,186                |         |          |          | 9,000      |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Non-cash compensation expense                              |                                                                                                          |          | 404                  |         |          |          | 670        |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Cumulative effect of a change in accounting principle      |                                                                                                          |          |                     |         |          |          | 10,185     |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Net decrease (increase) in other assets and liabilities    |                                                                                                          |          | 20,933               |         |          |          | (14,184    | )       
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|                                                                       |                                                                                               |                                                              |                                                            | Net cash provided by operating activities before activity for trading securities and held for sale loans |          |                      | 5,812   |          |          |            | 21,888   |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Purchases of trading mortgage securities                   |                                                                                                          |          | (118,020             | )       |          |          |           |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Payments from trading mortgage securities                  |                                                                                                          |          | 582                  |         |          |          | 126        |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Purchases and originations of mortgage loans held for sale |                                                                                                          |          | (3,678,439           | )       |          |          | (3,164,206 | )       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               |                                                              | Sales of and payments from mortgage loans held for sale    |                                                                                                          |          | 4,273,312            |         |          |          | 2,557,625  |         
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|                                                                       |                                                                                               |                                                              |                                                            | Net cash provided by (used in) operating activities                                                      |          |                      | 483,247 |          |          |            | (584,567 | )
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|Cash flows from investing activities:                                  |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Purchases of mortgage loans held for investment                                               |                                                              |                                                            | (96,739                                                                                                  | )        |                      |         | (21,754  | )       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Sales of and payments from mortgage loans held for investment                                 |                                                              |                                                            | 218,172                                                                                                  |          |                      |         | 131,761  |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net decrease (increase) in construction loans receivable                                      |                                                              |                                                            | 32,136                                                                                                   |          |                      |         | (71,872  | )       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net decrease in revolving warehouse lines of credit                                           |                                                              |                                                            | 79                                                                                                       |          |                      |         | 36,251   |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Purchases of mortgage securities available for sale                                           |                                                              |                                                            | (305,474                                                                                                 | )        |                      |         | (434,975 | )       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Sales of and payments from mortgage securities available for sale                             |                                                              |                                                            | 263,865                                                                                                  |          |                      |         | 90,483   |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net purchases of mortgage servicing rights                                                    |                                                              |                                                            | (687                                                                                                     | )        |                      |         | (2,017   | )       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net increase in investment in Federal Home Loan Bank stock, at cost                           |                                                              |                                                            | (5,713                                                                                                   | )        |                      |         | (17,248  | )       
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|                                                                       |                                                                                               | Net cash provided by (used in) investing activities          |                                                            |                                                                                                          | 105,639  |                      |         |          | (289,371 | )         
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|Cash
flows from financing activities:                                  |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net (decrease) increase in deposits                                                           |                                                              |                                                            | (124,921                                                                                                 | )        |                      |         | 387,754  |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net increase in advances from Federal Home Loan Bank                                          |                                                              |                                                            | 81,266                                                                                                   |          |                      |         | 344,963  |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net (decrease) increase in borrowings                                                         |                                                              |                                                            | (317,883                                                                                                 | )        |                      |         | 109,834  |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Net proceeds from issuance of common stock and exercise of stock options                      |                                                              |                                                            | 3,207                                                                                                    |          |                      |         | 12,711   |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       | Purchases of common stock                                                                     |                                                              |                                                            | (205                                                                                                     | )        |                      |         | (13,401  | )       
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|                                                                       |                                                                                               | Net cash (used in) provided by financing activities          |                                                            |                                                                                                          | (358,536 | )                    |         |          | 841,861  |           
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|Net increase (decrease) in cash and cash equivalents                   |                                                                                               |                                                              | 230,350                                                    |                                                                                                          |          |                      | (32,077 | )       
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Cash and cash equivalents at beginning of period                       |                                                                                               |                                                              | 153,295                                                    |                                                                                                          |          |                      | 67,867  |         
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|Cash and cash equivalents at end of period                             |                                                                                               | $                                                            | 383,645                                                    |                                                                                                          |          | $                    | 35,790  |         
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|Supplemental cash flow information:                                    |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               | Cash paid for interest                                       |                                                            | $                                                                                                        | 64,933   |                      |         | $        | 87,822   |           
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|                                                                       |                                                                                               | Cash paid for income taxes                                   |                                                            | $                                                                                                        | 566      |                      |         | $        | 44       |           
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         
|Supplemental disclosure of noncash investing and financing activities: |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |         
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                       |                                                                                               | Transfer of loans held for sale to loans held for investment |                                                            | $                                                                                                        | 148,546  |                      |         | $        | 137,800  |           
|                                                                       |                                                                                               |                                                              |                                                            |                                                                                                          |          |                      |         |          |         

The accompanying notes are an integral part of these statements.

-6-



---



##### Table of Contents






INDYMAC BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(Unaudited)

NOTE 1  BASIS OF PRESENTATION

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

The consolidated financial statements include the accounts of IndyMac Bancorp
and its subsidiaries, including IndyMac Bank, F.S.B. (IndyMac Bank). All
significant intercompany balances and transactions with IndyMacs consolidated
subsidiaries have been eliminated in consolidation. The consolidated financial
statements of IndyMac are prepared in conformity with accounting principles
generally accepted in the United States of America (US GAAP). The balance of
trust preferred securities at December 31, 2001 was reclassified from mezzanine
debt to liabilities to conform to the current period presentation. Operating
results for the quarter ended March 31, 2002 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2002. For
further information, refer to the consolidated financial statements and
footnotes thereto included in IndyMacs annual report on Form 10-K for the year
ended December 31, 2001.

NOTE 2  RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENT

Effective January 1, 2002, goodwill is no longer amortized, but rather tested
for impairment annually as a result of the adoption of SFAS No. 142, Goodwill
and Other Intangible Assets (SFAS 142). We did not recognize any impairment
on our goodwill upon adoption of SFAS 142 during the quarter ended March 31,
2002. Our core deposit intangible asset continues to be amortized using an
accelerated method of amortization over a period of 10 years, which is the
estimated life of the deposit relationships acquired.

Accumulated amortization of $2.6 million as of March 31, 2002 and $2.3 million
as of December 31, 2001 was netted against our core deposit intangible asset of
$7.7 million. Estimated amortization expense for our core deposit intangible
asset is as follows for the years ended December 31: 2002  $1.1 million; 2003  $852 thousand; 2004  $701 thousand; 2005  $591 thousand; 2006  $498
thousand; and 2007  $469 thousand.

Goodwill of $30.3 million as of January 1, 2002 was allocated to our segments
as follows: Mortgage Banking $1.5 million; Investment Portfolio $0.3 million;
and $28.5 million is included in Other, as that segment includes our retail
banking operations.

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##### Table of Contents



Had goodwill amortization not been recognized in the three months ended March
31, 2001 net income and basic and diluted earnings per share would have been as
follows:

|                                |  |                                               |        |      |  |   |        | 
|------------------------------- |  | --------------------------------------------- | ------ | ---- |  | - | ------ | 
|                                |  | Three Months Ended March 31,                 
|                                |  |                                              
|                                |  | 2002                                          |        | 2001
|                                |  |                                               |        |     
|                                |  | (Dollars in thousands, except per share data)
|Reported net earnings           |  | $                                             | 36,019 |      |  | $ | 15,038 | 
|                               
|                               
|                               
|                               
|Add back goodwill amortization  |  |                                               |       |      |  |   | 244    | 
|                                |  |                                               |        |      |  |   |        | 
|Adjusted net earnings           |  | $                                             | 36,019 |      |  | $ | 15,282 | 
|                                |  |                                               |        |      |  |   |        | 
|Basic earnings per share:       |  |                                               |        |      |  |   |        | 
|                               
|                               
|                               
|                               
|Reported net earnings per share |  | $                                             | 0.60   |      |  | $ | 0.24   | 
|                               
|                               
|                               
|                               
|Goodwill amortization           |  |                                               |       |      |  |   | 0.01   | 
|                                |  |                                               |        |      |  |   |        | 
|Adjusted net earnings per share |  | $                                             | 0.60   |      |  | $ | 0.25   | 
|                                |  |                                               |        |      |  |   |        | 
|Diluted earnings per share:     |  |                                               |        |      |  |   |        | 
|                               
|                               
|                               
|                               
|Reported net earnings per share |  | $                                             | 0.58   |      |  | $ | 0.23   | 
|                               
|                               
|                               
|                               
|Goodwill amortization           |  |                                               |       |      |  |   | 0.01   | 
|                                |  |                                               |        |      |  |   |        | 
|Adjusted net earnings per share |  | $                                             | 0.58   |      |  | $ | 0.24   | 
|                                |  |                                               |        |      |  |   |        | 

NOTE 3  SEGMENT REPORTING

Our reportable operating segments are Mortgage Banking and Investment
Portfolio. Prior to 2002, we also had a Builder Finance segment. The Builder
Finance segment was combined with the Mortgage Banking segment during 2002 to
align our builder-oriented business more closely with our mortgage banking
activities, by focusing our builder construction lending efforts on those
homebuilders that have the highest likelihood of utilizing our technology to
provide the related permanent mortgage loans to their customers. Segment
information for 2001, including a change in the allocation method of
interest expense to the operating segments, has been restated to conform to the current year
presentation.

The Mortgage Banking segmentpurchases conforming, jumbo and other
non-conforming mortgage loans from business-to-business (B2B) customers, and
funds loans directly to consumers. These loans are then either securitized
through the issuance of mortgage-backed securities, sold to government
sponsored entities, resold in bulk whole loan sales to investors, or retained
by our Investment Portfolio segment. The Mortgage Banking segment also
administers the related construction advances for the purchase of
construction-to-permanent mortgage loans originated by or sourced through our
B2B sellers and direct customers, as well as residential construction loans to
builders. Additionally, Mortgage Banking operates a business-to-realtor
channel, LoanWorks.com®, which allows real estate professionals to utilize our
technology to fulfill the mortgage loan process for their customers in the
process of purchasing a home.

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The Investment Portfolio segmentinvests in single-family residential loans,
mortgage securities and mortgage servicing rights on a long-term basis. The
Investment Portfolio also performs mortgage servicing activities.

The profitability of each operating segment is measured on a fully-leveraged
basis after allocating capital based on regulatory capital rules. Corporate
costs such as corporate salaries and related expenses, excess capital, and
non-recurring corporate items are unallocated and included in Other below.

Segment information for the three months ended March 31, 2002 and 2001 was as
follows:

|                                                                             |  |          |           |            |  |                        |           |              |  |   |         |   |  |   |           |  
|---------------------------------------------------------------------------- |  | -------- | --------- | ---------- |  | ---------------------- | --------- | ------------ |  | - | ------- | - |  | - | --------- | -
|                                                                             |  | Mortgage |           | Investment |  |                        |           |              |  |   |         |  
|                                                                             |  | Banking  |           | Portfolio  |  | Other                  |           | Consolidated
|                                                                             |  |          |           |            |  |                        |           |             
|                                                                             |  |          |           |            |  | (Dollars in thousands) |           |              |  |  
|2002                                                                         |  |          |           |            |  |                        |           |              |  |   |         |   |  |   |           |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net interest income (expense)                                                |  | $        | 44,893    |            |  | $                      | 23,735    |              |  | $ | (14,874 | ) |  | $ | 53,754    |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net revenues (loss)                                                          |  |          | 133,618   |            |  |                        | 22,593    |              |  |   | (14,734 | ) |  |   | 141,477   |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net earnings (loss)                                                          |  |          | 49,620    |            |  |                        | 8,213     |              |  |   | (21,814 | ) |  |   | 36,019    |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|2001                                                                         |  |          |           |            |  |                        |           |              |  |   |         |   |  |   |           |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net interest income                                                          |  | $        | 23,376    |            |  | $                      | 21,714    |              |  | $ | (2,033  | ) |  | $ | 43,057    |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net revenues                                                                 |  |          | 82,508    |            |  |                        | 22,478    |              |  |   | (1,808  | ) |  |   | 103,178   |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Earnings (loss) before cumulative effect
of a change in accounting principle |  |          | 26,476    |            |  |                        | 11,865    |              |  |   | (13,118 | ) |  |   | 25,223    |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Cumulative effect of a change in
accounting principle                        |  |          | 21        |            |  |                        | (10,206   | )            |  |   |        |   |  |   | (10,185   | )
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Net earnings (loss)                                                          |  |          | 26,497    |            |  |                        | 1,659     |              |  |   | (13,118 | ) |  |   | 15,038    |  
|                                                                            
|                                                                            
|                                                                            
|                                                                            
|Assets as of March 31, 2002                                                  |  | $        | 3,196,648 |            |  | $                      | 3,549,064 |              |  | $ | 421,557 |   |  | $ | 7,167,269 |  

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

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-Q may be deemed to be
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include statements regarding our financial
condition, results of operations, plans, objectives and future performance and
business. Forward-looking statements typically include the words anticipate,
believe, estimate, expect, project, plan, forecast, intend, and
other similar expressions. These statements reflect our current views with
respect to future events and financial performance. They are subject to risks
and uncertainties, which could cause future results to differ materially from
historical results or from the results anticipated. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only
as of their dates or as of the date hereof if no other date is identified. We
undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. For
further information on our key operating risks, refer to IndyMacs annual
report on Form 10-K for the year ended December 31, 2001.

BUSINESS MODEL

We are a savings and loan holding company. Our strategy is to be a leading
provider of home mortgage loans. We offer a wide array of home mortgage
products using a technology-based approach, leveraged across multiple products,
channels and customers. We serve a wide range of customers, including
consumers, mortgage brokers, mortgage bankers, community financial
institutions, homebuilders and real estate professionals. To manage our
various operations, we have aligned our business into two reportable operating
segments: Mortgage Banking and Investment Portfolio. References to IndyMac
Bancorp refers to the parent company alone while references to IndyMac, the
Company or we refer to IndyMac Bancorp, Inc. and its consolidated
subsidiaries.

MORTGAGE BANKING GROUP

The Mortgage Banking group is our core business. The Mortgage Banking groups
operations include the acquisition (purchase and origination), sale and
securitization of mortgage loans secured by one-to-four family
(single-family) residences. It also provides construction financing for
single-family residences directly to individual consumers, and builder
construction financing activities for larger residential subdivision loans.
The Mortgage Banking group derives its revenue primarily from the gain on sale
of loans, net interest income, and fee income associated with the
loans held for sale portfolio. During the first quarter of 2002, the loans were sold in pools
through one of three sales distribution channels 43 days on average after the
loans were acquired. These distribution channels include sales to the
government sponsored entities (GSEs) (which then securitize or place the loans
in their portfolios), whole loan sales, and private-label
securitizations. One of our strategies is to reduce the period of
time we hold loans before they are sold. The reduction in net interest income caused
by a faster loan turnover rate should be more than offset by increases in gain
on sale of loans.

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The following table sets forth the activity in loans held for sale for the
three months ended March 31, 2002 and 2001.

|                                   |                                           |   |                              |       |      |   |       |       |  
|---------------------------------- | ----------------------------------------- | - | ---------------------------- | ----- | ---- | - | ----- | ----- | -
|                                   |                                           |   | Three Months Ended March 31,
|                                   |                                           |   |                             
|                                   |                                           |   | 2002                         |       | 2001
|                                   |                                           |   |                              |       |     
|                                   |                                           |   | (Dollars in millions)       
|Beginning balance                  |                                           | $ | 2,081                        |       |      | $ | 1,421 |      
|                                  
|                                  
|                                  
|                                  
|Production                         |                                           |   | 3,678                        |       |      |   | 3,164 |      
|                                  
|                                  
|                                  
|                                  
|Less:                              |                                           |   |                              |       |      |   |       |      
|                                  
|                                  
|                                  
|                                  
|                                   | Loans sold                                |   |                              | 4,254 |      |   |       | 2,622 |  
|                                  
|                                  
|                                  
|                                  
|                                   | Loans transferred to investment portfolio |   |                              | 149   |      |   |       | 138   |  
|                                  
|                                  
|                                  
|                                  
|                                   | Principal reductions and other            |   |                              | 31    |      |   |       | 30    |  
|                                   |                                           |   |                              |       |      |   |       |      
|Increase (decrease) in total loans |                                           |   | (756                         | )     |      |   | 374   |      
|                                   |                                           |   |                              |       |      |   |       |      
|Ending balance                     |                                           | $ | 1,325                        |       |      | $ | 1,795 |      
|                                   |                                           |   |                              |       |      |   |       |      
|% of sales to production           |                                           |   | 117                          | %     |      |   | 83    | %    
|                                  
|                                  
|                                  
|                                  
|% of loans sold by channel:        |                                           |   |                              |       |      |   |       |      
|                                  
|                                  
|                                  
|                                  
|                                   | GSE (Freddie Mac/Fannie Mae)              |   |                              | 62    | %    |   |       | 66    | %
|                                  
|                                  
|                                  
|                                  
|                                   | Private-label securitization              |   |                              | 36    | %    |   |       | 13    | %
|                                  
|                                  
|                                  
|                                  
|                                   | Whole loan sales                          |   |                              | 2     | %    |   |       | 21    | %
|                                   |                                           |   |                              |       |      |   |       |      
|                                   |                                           |   | 100                          | %     |      |   | 100   | %    
|                                   |                                           |   |                              |       |      |   |       |      

INVESTMENT PORTFOLIO GROUP

The strategy of our Investment Portfolio group is: 1) to provide support for
the Mortgage Banking group through its ability to hold whole loans and retain
assets from loan sales and securitizations, and 2) to acquire loans, servicing
and securities in the secondary market.

The composition of the Investment Portfolio includes mortgage loans held for
investment, mortgage-backed securities and mortgage servicing rights.
Mortgage-backed securities include agency and non-agency investment grade
securities, non-investment grade securities and residuals. Mortgage loans held
for investment are typically originated or acquired by the Mortgage Banking
group and transferred to the Investment Portfolio group for long-term
investment. Such loans are typically prime adjustable-rate mortgage loans as
the majority of subprime loans are securitized and sold.

Mortgage-backed securities retained by the Investment Portfolio group are
generated in connection with the Mortgage Banking groups issuance of
private-label securities and agency loan sales. Retained assets typically
include mortgage servicing rights, and to a lesser degree, AAA-rated
interest-only securities, non-investment grade securities and residuals.
Senior securities created in connection with the Mortgage Banking groups
securitization activities are not usually retained in the Investment Portfolio.
In addition to retaining assets from IndyMacs private-label securitizations
and agency loan sales, the Investment Portfolio also purchases mortgage-backed
securities issued by other lenders in the secondary mortgage market.

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The primary source of revenue for the Investment Portfolio is spread income on
loans and securities and service fee income from mortgage servicing rights.
Valuation changes on mortgage servicing rights (subject to lower of amortized
cost or fair value limitations), AAA-rated interest-only securities and the
related hedges, including principal-only securities, are also recognized
through earnings.

RESULTS OF OPERATIONS

OVERVIEW

Earnings for the quarter ended March 31, 2002 were $36.0 million, compared to
$15.0 million in the same period of 2001. Net earnings per share were $0.58
and $0.23, for the quarters ended March 31, 2002 and 2001, respectively. The
growth in net earnings was primarily attributable to a $28.3 million increase
in gain on sale of loans due to higher volumes sold, a $10.7 million increase
in net interest income driven by an increase in the average balance of net
interest earning assets and an increase in our net interest spread, and a $10.2
million one-time charge in 2001 related to the cumulative effect of a change in
accounting principle. These increases to net earnings were offset in part by
an increase in expenses of $19.8 million, and an increase in income taxes of
$7.7 million. A more detailed analysis of the components of net earnings
follows.

NET INTEREST INCOME

Earnings for the quarter ended March 31, 2002
were $36.0 million, compared to $15.0 million in the same
period of 2001. Net earnings per share were $0.58 and $0.23, for the
quarters ended March 31, 2002 and 2001, respectively. The growth
in net earnings was primarily attributable to a $28.3 million
increase in gain on sale of loans due to higher volumes sold, a
$10.7 million increase in net interest income driven by an
increase in the average balance of net interest earning assets and an
increase in our net interest spread, and a $10.2 million
one-time charge in 2001 related to the cumulative effect of a change
in accounting principle. These increases to net earnings were offset
in part by an increase in expenses of $19.8 million, and an increase
in income taxes of $7.7 million. A more detailed analysis of the
components of net earnings follows.

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

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|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |      |  
|---------------------------------------------------- | ------------------------------------------ | - | ---------------------------- | --------- | -------- | - | ---------------------- | ------- | ------- |  | -------- | ---- | ---- | - | --------- | --------- | ----- | - | ------ | ------- |  |  | ---- | ---- | -
|                                                     |                                            |   | Three Months Ended March 31,
|                                                     |                                            |   |                             
|                                                     |                                            |   | 2002                         |           | 2001    
|                                                     |                                            |   |                              |           |         
|                                                     |                                            |   | Average                      |           |          |   |                        |         | Yield   |  | Average  |      |      |   |           |           | Yield
|                                                     |                                            |   | Balance                      |           | Interest |   | Rate                   |         | Balance |  | Interest |      | Rate
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |     
|                                                     |                                            |   |                              |           |          |   | (Dollars in thousands) |         |         |  |          |      |      |   |          
|Investment securities AFS                            |                                            | $ |                             |           |          | $ |                       |         |         |  | 0.00     | %    |      | $ | 14,586    |           |       | $ | 248    |         |  |  | 6.91 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Mortgage-backed securities                           |                                            |   | 1,556,025                    |           |          |   | 28,881                 |         |         |  | 7.53     | %    |      |   | 1,337,919 |           |       |   | 31,311 |         |  |  | 9.49 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Loans held for sale                                  |                                            |   | 2,063,096                    |           |          |   | 36,744                 |         |         |  | 7.22     | %    |      |   | 1,839,363 |           |       |   | 37,928 |         |  |  | 8.36 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Loans held for investment                            |                                            |   | 3,037,881                    |           |          |   | 56,275                 |         |         |  | 7.51     | %    |      |   | 2,649,492 |           |       |   | 60,921 |         |  |  | 9.33 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Investment in Federal Home Loan Bank stock and other |                                            |   | 139,330                      |           |          |   | 1,782                  |         |         |  | 5.19     | %    |      |   | 84,878    |           |       |   | 1,552  |         |  |  | 7.41 | %   
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|                                                     | Total interest-earning assets              |   |                              | 6,796,332 |          |   |                        | 123,682 |         |  |          | 7.38 | %    |   |           | 5,926,238 |       |   |        | 131,960 |  |  |      | 9.03 | %
|                                                    
|                                                    
|                                                    
|                                                    
|Other                                                |                                            |   | 672,174                      |           |          |   |                        |         |         |  |          |      |      |   | 443,624   |           |       |   |        |         |  |  |      |     
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|                                                     | Total assets                               |   | $                            | 7,468,506 |          |   |                        |         |         |  |          |      |      |   | $         | 6,369,862 |       |   |        |         |  |  |      |      |  
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|Interest-bearing deposits                            |                                            | $ | 2,962,747                    |           |          |   | 31,308                 |         |         |  | 4.29     | %    |      | $ | 939,560   |           |       |   | 14,474 |         |  |  | 6.25 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Advances from Federal Home Loan Bank                 |                                            |   | 1,956,627                    |           |          |   | 24,389                 |         |         |  | 5.06     | %    |      |   | 1,448,424 |           |       |   | 22,416 |         |  |  | 6.28 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Trust preferred securities                           |                                            |   | 116,333                      |           |          |   | 2,756                  |         |         |  | 9.61     | %    |      |   |          |           |       |   |       |         |  |  | 0.00 | %   
|                                                    
|                                                    
|                                                    
|                                                    
|Other borrowings                                     |                                            |   | 1,098,045                    |           |          |   | 11,475                 |         |         |  | 4.24     | %    |      |   | 3,135,908 |           |       |   | 52,013 |         |  |  | 6.73 | %   
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|                                                     | Total interest-bearing liabilities         |   |                              | 6,133,752 |          |   |                        | 69,928  |         |  |          | 4.62 | %    |   |           | 5,523,892 |       |   |        | 88,903  |  |  |      | 6.53 | %
|                                                    
|                                                    
|                                                    
|                                                    
|Other                                                |                                            |   | 470,100                      |           |          |   |                        |         |         |  |          |      |      |   | 106,623   |           |       |   |        |         |  |  |      |     
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|                                                     | Total liabilities                          |   |                              | 6,603,852 |          |   |                        |         |         |  |          |      |      |   |           | 5,630,515 |       |   |        |         |  |  |      |      |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Shareholders equity                       |   |                              | 864,654   |          |   |                        |         |         |  |          |      |      |   |           | 739,347   |       |   |        |         |  |  |      |      |  
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|                                                     | Total liabilities and shareholders equity |   | $                            | 7,468,506 |          |   |                        |         |         |  |          |      |      |   | $         | 6,369,862 |       |   |        |         |  |  |      |      |  
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|Net interest spread                                  |                                            |   |                              |           |          |   |                        |         |         |  | 2.76     | %    |      |   |           |           |       |   |        |         |  |  | 2.50 | %   
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     
|Net interest margin                                  |                                            |   |                              |           |          |   |                        |         |         |  | 3.21     | %    |      |   |           |           |       |   |        |         |  |  | 2.95 | %   
|                                                     |                                            |   |                              |           |          |   |                        |         |         |  |          |      |      |   |           |           |       |   |        |         |  |  |      |     

The net interest spread is the difference between the weighted average yield on
interest-earning assets and the weighted average cost of interest-bearing
liabilities. The net interest margin measures net interest income as a
percentage of average interest-earning assets.

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

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##### Table of Contents



|                                                     |  |                            |         |      |  |              |         |   |  |   |         |  
|---------------------------------------------------- |  | -------------------------- | ------- | ---- |  | ------------ | ------- | - |  | - | ------- | -
|                                                     |  | 2002 vs 2001              
|                                                     |  |                           
|                                                     |  | Increase/(decrease) due to
|                                                     |  |                           
|                                                     |  | Volume                     |         | Rate |  | Total Change
|                                                     |  |                            |         |      |  |             
|                                                     |  | (Dollars in thousands)    
|Interest income                                      |  |                            |         |      |  |              |         |   |  |   |         |  
|                                                    
|                                                    
|                                                    
|                                                    
|Investment securities AFS                            |  | $                          | (248    | )    |  | $            |        |   |  | $ | (248    | )
|                                                    
|                                                    
|                                                    
|                                                    
|Mortgage-backed securities                           |  |                            | 4,631   |      |  |              | (7,061  | ) |  |   | (2,430  | )
|                                                    
|                                                    
|                                                    
|                                                    
|Loans held for sale                                  |  |                            | 4,310   |      |  |              | (5,494  | ) |  |   | (1,184  | )
|                                                    
|                                                    
|                                                    
|                                                    
|Loans held for investment                            |  |                            | 8,201   |      |  |              | (12,847 | ) |  |   | (4,646  | )
|                                                    
|                                                    
|                                                    
|                                                    
|Investment in Federal Home Loan Bank stock and other |  |                            | 791     |      |  |              | (561    | ) |  |   | 230     |  
|                                                     |  |                            |         |      |  |              |         |   |  |   |         |  
|Total interest income                                |  |                            | 17,685  |      |  |              | (25,963 | ) |  |   | (8,278  | )
|                                                    
|                                                    
|                                                    
|                                                    
|Interest expense
Interest-bearing deposits           |  |                            | 22,632  |      |  |              | (5,798  | ) |  |   | 16,834  |  
|                                                    
|                                                    
|                                                    
|                                                    
|Advances from Federal Home Loan Bank                 |  |                            | 6,891   |      |  |              | (4,918  | ) |  |   | 1,973   |  
|                                                    
|                                                    
|                                                    
|                                                    
|Trust preferred securities                           |  |                            | 2,756   |      |  |              |        |   |  |   | 2,756   |  
|                                                    
|                                                    
|                                                    
|                                                    
|Other borrowings                                     |  |                            | (25,825 | )    |  |              | (14,713 | ) |  |   | (40,538 | )
|                                                     |  |                            |         |      |  |              |         |   |  |   |         |  
|Total interest expense                               |  |                            | 6,454   |      |  |              | (25,429 | ) |  |   | (18,975 | )
|                                                     |  |                            |         |      |  |              |         |   |  |   |         |  
|Net interest income                                  |  | $                          | 11,231  |      |  | $            | (534    | ) |  | $ | 10,697  |  
|                                                     |  |                            |         |      |  |              |         |   |  |   |         |  

PROVISION FOR LOAN LOSSES

The provision for loan losses was $4.2 million for the three months ended March
31, 2002 compared to $9.0 million for the three months ended March 31, 2001.
Our determination of the level of the allowance for loan losses and,
correspondingly, the provision for loan losses, is based on our judgments and
assumptions regarding various matters, including general economic conditions,
loan portfolio composition, delinquency trends and prior loan loss experience.
During the first quarter of 2001, management determined that it should bolster
its reserves on its non-core portfolios, specifically, the home improvement
portfolio, due to the expected credit losses in this portfolio that we estimated
at that time. The majority of this portfolio was sold in the fourth quarter of
2001, reducing the level of provisions required for this portfolio in the
future. During the first quarter of 2002, $2.2 million of the $4.2 million provision was related to
the Companys core portfolio, and the remaining $2.0 million was related to
manufactured housing loans, which are included in the Companys non-core
portfolio. We believe our allowance for loan losses was adequate at March 31,
2002.

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OTHER INCOME

Other income consisted of the following:

|                                        |                    |   |                              |        |      |   |        |        | 
|--------------------------------------- | ------------------ | - | ---------------------------- | ------ | ---- | - | ------ | ------ | 
|                                        |                    |   | Three Months Ended March 31,
|                                        |                    |   |                             
|                                        |                    |   | 2002                         |        | 2001
|                                        |                    |   |                              |        |     
|                                        |                    |   | (Dollars in thousands)      
|Gain on sale of loans                   |                    | $ | 77,466                       |        |      | $ | 49,199 |       
|                                       
|                                       
|                                       
|                                       
|Service fee income                      |                    |   | 7,822                        |        |      |   | 11,462 |       
|                                       
|                                       
|                                       
|                                       
|Loss on mortgage-backed securities, net |                    |   | (6,988                       | )      |      |   | (2,487 | )     
|                                       
|                                       
|                                       
|                                       
|Fee and other income                    |                    |   | 13,609                       |        |      |   | 10,947 |       
|                                        |                    |   |                              |        |      |   |        |       
|                                        | Total other income |   | $                            | 91,909 |      |   | $      | 69,121 | 
|                                        |                    |   |                              |        |      |   |        |       

Gain on Sale of Loans

The 57.5% increase in gain on sale of loans was primarily due to a $1.7 billion
increase in the principal amount of loans sold to $4.3 billion during the first
quarter of 2002 from the $2.6 billion sold in the first quarter of 2001.

In conjunction with our loan sale transactions, we retain certain assets from
private-label securitizations and loan sales to the GSEs. The primary assets
retained include mortgage servicing rights, and to a lesser degree, AAA-rated
interest-only securities, non-investment grade securities, and residual
securities. The allocated cost of the retained assets at the time of the sale
is recorded as a component of the gain on sale of loans. Included in the $77.5
million in gain on sale of loans earned during the three months ended March 31,
2002 was the fair value of retained assets totaling $86.6 million.

We have established a reserve for losses that arise in connection with loans
that we are required to repurchase from loan sales based on standard
representations and warranties made at the time of the sale or securitization
or for which we may make payments to settle disputes related to these
representations and warranties. During the quarter ended March 31, 2002, our
gain on sale was reduced by $2.7 million associated with this secondary market
reserve. See additional information below in Financial Condition  Secondary
Market Reserve.

Service Fee Income

Service fee income totaled $7.8 million for the three months ended March 31,
2002, compared to $11.5 million for the same period in 2001. The $3.7 million
decrease in service fee income was driven by a decrease in valuation
adjustments, net of hedges, quarter over quarter. During the first quarter of
2002, net valuation gains totaled $0.6 million, compared to net valuation gains
of $3.2 million during the first quarter of 2001.

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Loss On Mortgage-Backed Securities, Net

We recorded a net loss on mortgage-backed securities of $7.0 million for the
three months ended March 31, 2002, compared to a net loss of $2.5 million for
the same period in 2001. The net loss on mortgage-backed securities consisted
of the following:

|                                                                                  |                                               |   |                              |        |      |   |        |        |  
|--------------------------------------------------------------------------------- | --------------------------------------------- | - | ---------------------------- | ------ | ---- | - | ------ | ------ | -
|                                                                                  |                                               |   | Three Months Ended March 31,
|                                                                                  |                                               |   |                             
|                                                                                  |                                               |   | 2002                         |        | 2001
|                                                                                  |                                               |   |                              |        |     
|                                                                                  |                                               |   | (Dollars in thousands)      
|Gain on sales of mortgage-backed securities                                       |                                               | $ | 2,619                        |        |      | $ | 1,175  |       
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Impairment on AFS securities                                                      |                                               |   | (500                         | )      |      |   | (3,169 | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Valuation adjustments on AAA-rated interest-only
securities classified as trading |                                               |   | (11,398                      | )      |      |   | (802   | )     
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Hedges on AAA-rated interest-only securities
classified as trading                |                                               |   | 2,291                        |        |      |   | 309    |       
|                                                                                  |                                               |   |                              |        |      |   |        |       
|                                                                                  | Total loss on mortgage-backed securities, net |   | $                            | (6,988 | )    |   | $      | (2,487 | )
|                                                                                  |                                               |   |                              |        |      |   |        |       

Faster than projected actual short-term prepayment speeds on the AAA-rated
interest-only securities, and a tightening of mortgage spreads relative to swap
spreads, resulted in an underperformance of hedges on these securities during
the first quarter of 2002. In response to the spread tightening, which
resulted in reduced correlation, the Company increased its mix of AAA-rated
principalonly securities, reducing its position in swap-based hedges. See
further discussion in Financial Condition  Mortgage-Backed Securities.

Fee and Other Income

Fee and other income increased to $13.6 million for the three months ended
March 31, 2002 from $10.9 million for the same period in 2001. The 24.8%
increase was a direct result of the increase in mortgage production volume in
2002 compared to 2001.

TOTAL OTHER EXPENSE

General

Total other expense consisted of the following:

|                                                     |                     |   |                              |        |      |   |        |        | 
|---------------------------------------------------- | ------------------- | - | ---------------------------- | ------ | ---- | - | ------ | ------ | 
|                                                     |                     |   | Three Months Ended March 31,
|                                                     |                     |   |                             
|                                                     |                     |   | 2002                         |        | 2001
|                                                     |                     |   |                              |        |     
|                                                     |                     |   | (Dollars in thousands)      
|Salaries and related                                 |                     | $ | 49,535                       |        |      | $ | 36,749 |       
|                                                    
|                                                    
|                                                    
|                                                    
|General and administrative expenses                  |                     |   | 30,019                       |        |      |   | 22,316 |       
|                                                    
|                                                    
|                                                    
|                                                    
|Amortization of goodwill and other intangible assets |                     |   | 299                          |        |      |   | 960    |       
|                                                     |                     |   |                              |        |      |   |        |       
|                                                     | Total other expense |   | $                            | 79,853 |      |   | $      | 60,025 | 
|                                                     |                     |   |                              |        |      |   |        |       

The increase in salaries and related and general and administrative expenses is
primarily a result of the Companys overall growth in loan production, and
related variable costs.

During the three months ended March 31, 2002, amortization of intangible
assets, excluding goodwill, was $299 thousand, down from $542 thousand for the
same period in 2001. In addition, during the quarter ended March 31, 2001,
goodwill amortization was $418 thousand, whereas in 2002 there was

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no goodwill amortization due to the adoption of Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS
142) on January 1, 2002, which mandated that goodwill no longer be amortized,
but rather tested for impairment annually. We did not recognize any impairment
on our goodwill upon adoption of SFAS 142. Our core deposit intangible asset
continues to be amortized using an accelerated method of amortization over a
period of 10 years, which is the estimated life of the deposit relationships
acquired.

Income Taxes

Income taxes of $25.6 million and $17.9 million for the three months ended
March 31, 2002 and 2001, respectively, represented an effective tax rate of
41.6%.

CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE

During January of 2001, we recognized a $10.2 million charge to earnings, net
of taxes, which was recorded as a cumulative effect of a change in accounting
principle in connection with the adoption of Emerging Issues Task Force Issue
No. 99-20 Recognition of Interest Income and Impairment on Certain
Investments (EITF 99-20). This charge was primarily attributable to the
non-investment grade and residual securities portfolio associated with the
discontinued manufactured housing product line. We discontinued the
manufactured housing product line with dealers during 1999, but the portfolio
investments that were retained from this product line continued to be impacted
by declining trends in the industry. These securities had previously been
marked-to-market through other comprehensive income (OCI), a separate
component of shareholders equity. As a result, this change had a $2.1 million
net impact on total shareholders equity.

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FINANCIAL CONDITION

MORTGAGE-BACKED SECURITIES

Overview

Our mortgage-backed securities portfolio is recorded at fair value. The
balances consisted of the following types of securities:

|                                         |                                                       |   |                        |           |              |   |           |           | 
|---------------------------------------- | ----------------------------------------------------- | - | ---------------------- | --------- | ------------ | - | --------- | --------- | 
|                                         |                                                       |   | March 31,              |           | December 31,
|                                         |                                                       |   | 2002                   |           | 2001        
|                                         |                                                       |   |                        |           |             
|                                         |                                                       |   | (Dollars in thousands)
|Mortgage-backed securities  Trading     |                                                       |   |                        |           |              |   |           |          
|                                        
|                                        
|                                        
|                                        
|AAA-rated interest-only securities       |                                                       | $ | 192,932                |           |              | $ | 211,104   |          
|                                        
|                                        
|                                        
|                                        
|AAA-rated principal-only securities      |                                                       |   | 120,989                |           |              |   | 4,096     |          
|                                         |                                                       |   |                        |           |              |   |           |          
|                                         | Total mortgage-backed securities  Trading            |   | $                      | 313,921   |              |   | $         | 215,200   | 
|                                         |                                                       |   |                        |           |              |   |           |          
|Mortgage-backed securities  AFS         |                                                       |   |                        |           |              |   |           |          
|                                        
|                                        
|                                        
|                                        
|AAA-rated agency securities              |                                                       | $ | 132,974                |           |              | $ | 89,752    |          
|                                        
|                                        
|                                        
|                                        
|AAA-rated non-agency securities          |                                                       |   | 1,178,039              |           |              |   | 1,170,960 |          
|                                        
|                                        
|                                        
|                                        
|Other investment grade securities        |                                                       |   | 33,189                 |           |              |   | 40,042    |          
|                                         |                                                       |   |                        |           |              |   |           |          
|                                         | Total investment grade mortgage-backed securities     |   |                        | 1,344,202 |              |   |           | 1,300,754 | 
|                                         |                                                       |   |                        |           |              |   |           |          
|Non-investment grade residual securities |                                                       |   | 55,395                 |           |              |   | 43,123    |          
|                                        
|                                        
|                                        
|                                        
|Other non-investment grade securities    |                                                       |   | 5,137                  |           |              |   | 5,282     |          
|                                         |                                                       |   |                        |           |              |   |           |          
|                                         | Total non-investment grade mortgage-backed securities |   |                        | 60,532    |              |   |           | 48,405    | 
|                                         |                                                       |   |                        |           |              |   |           |          
|                                         | Total mortgage-backed securities  AFS                |   | $                      | 1,404,734 |              |   | $         | 1,349,159 | 
|                                         |                                                       |   |                        |           |              |   |           |          

During 2002, we purchased $118 million of AAA-rated principal-only securities
as a component of our overall position to hedge the interest rate risk
attendant with AAA-rated interest-only securities and mortgage servicing
rights. The purchase of these securities allowed us to reduce our position in
swap-based hedges, which we believe will reduce the basis risk between swap and
mortgage-based assets and hedges. In a declining interest rate environment the
value of AAA-rated principal-only securities would tend to increase because the
rise in prepayments would tend to accelerate the return of our investment in
the principal portion of the underlying loans. The Company seeks to manage the
effects of rising and falling interest rates through investing in financial
instruments with contrasting sensitivities to interest rates. The
AAA-rated principal-only securities generate core interest income and serve to balance the
overall interest rate sensitivity of our balance sheet.

AAA-Rated Interest-Only Securities and Residuals

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

Adjustments to the carrying value of AAA-rated interest-only and principal-only
securities, which are classified as trading securities, are recorded as gain
(loss) on mortgage-backed securities through the statement of earnings.
Additionally, hedging gains and losses related to AAA-rated interest-only
securities are recorded through earnings with the corresponding fair value of
the hedge reported as other assets or other liabilities. Adjustments to the
carrying value of residual securities are recorded as a component of OCI in
shareholders equity, except for other than temporary impairments, which are

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recorded as a component of gain (loss) on mortgage-backed securities through
the statement of earnings.

The assumptions used to value AAA-rated interest-only and residual securities
at March 31, 2002 and December 31, 2001 follow (dollars in thousands):

|                                   |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  |      |      |  |  |  |      |   |  |  |      |           |  |  |     |  
|---------------------------------- |  | ------ | ------- | --------------------- |  | ----- | --------- | -------- |  | ------- | ---- | -------- |  | -------- | ---- | -------- |  | --------- | ---- | - |  | ---- | ---- |  |  |  | ---- | - |  |  | ---- | --------- |  |  | --- | -
|                                   |  | Actual |         | Valuation Assumptions
|                                   |  |        |         |                      
|                                   |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  | Wtd. |      |  |  |  |      |   |  |  |      | Remaining
|                                   |  | Book   |         | Collateral            |  | Gross |           | Interest |  | 3-Month |      | Avg.     |  | Lifetime |      | Discount |  | Cum. Loss
|                                   |  | Value  |         | Balance               |  | WAC   |           | Strip    |  | CPR     |      | Multiple |  | CPR      |      | Yield    |  | Rate     
|                                   |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |          
|March 31, 2002                     |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  |      |      |  |  |  |      |   |  |  |      |           |  |  |     |  
|                                  
|                                  
|                                  
|                                  
|AAA-rated interest-only securities |  | $      | 192,932 |                       |  | $     | 7,863,882 |          |  |         | 7.52 | %        |  |          | 0.82 | %        |  |           | 41.5 | % |  |      | 2.99 |  |  |  | 16.7 | % |  |  | 10.7 | %         |  |  | N/A |  
|                                   |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  |      |      |  |  |  |      |   |  |  |      |           |  |  |     |  
|Residual securities                |  | $      | 55,395  |                       |  | $     | 3,221,179 |          |  |         | 9.33 | %        |  |          | 3.23 | %        |  |           | 26.4 | % |  |      | 0.53 |  |  |  | 27.5 | % |  |  | 24.1 | %         |  |  | 1.8 | %
|                                   |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  |      |      |  |  |  |      |   |  |  |      |           |  |  |     |  
|December 31, 2001                  |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  |      |      |  |  |  |      |   |  |  |      |           |  |  |     |  
|                                  
|                                  
|                                  
|                                  
|AAA-rated interest-only securities |  | $      | 211,104 |                       |  | $     | 8,943,350 |          |  |         | 7.55 | %        |  |          | 0.81 | %        |  |           | 31.9 | % |  |      | 2.91 |  |  |  | 16.9 | % |  |  | 11.6 | %         |  |  | N/A |  
|                                   |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  |      |      |  |  |  |      |   |  |  |      |           |  |  |     |  
|Residual securities                |  | $      | 43,123  |                       |  | $     | 2,845,979 |          |  |         | 9.62 | %        |  |          | 3.52 | %        |  |           | 28.1 | % |  |      | 0.52 |  |  |  | 30.4 | % |  |  | 25.2 | %         |  |  | 2.0 | %
|                                   |  |        |         |                       |  |       |           |          |  |         |      |          |  |          |      |          |  |           |      |   |  |      |      |  |  |  |      |   |  |  |      |           |  |  |     |  

The lifetime CPR represents the constant prepayment rate we estimate for the
remaining life of the collateral supporting the asset. We project prepayment
rates using four-factor prepayment models which incorporate relative weighted
average note rate, seasoning, seasonality and burn out of the pool of loans
relative to expectations of future rates implied by the forward LIBOR/swap
curve. As of March 31, 2002, the 10-year forward curve was upward sloping over
a five-year period, which resulted in our estimate of prepayment rates
decreasing over the life of the loans. The projected remaining cumulative loss
rate for residuals represents the projected future cumulative credit losses as
a percentage of the original collateral balance. Actual losses to date on
collateral underlying residual securities total 0.6% for a total lifetime loss
estimate of 2.4%. We use internal loss estimation models to estimate such
losses.

The weighted average multiple for AAA-rated interest-only and residual
securities represents the book value divided by the product of collateral
balance and interest strip. While the weighted average life of such assets is a
function of the undiscounted cash flows, the multiple is a function of the
weighted average life of the discounted cash flows. With regard to AAA-rated
interest-only securities, the marketplace frequently uses calculated multiples
to assess the overall impact valuation assumptions have on value. When
comparing multiples, collateral type, coupon, loan age and interest strip must
be considered.

Other Investment Grade and Non-Investment Grade Securities

We estimated fair value for other investment grade and non-investment grade
mortgage-backed securities based on market information when available or
discounted cash flow techniques using assumptions for credit losses, prepayment
rates, and market yield requirements. Adjustments to the carrying value are
recorded as a component of OCI in shareholders equity, except for other than
temporary impairments, which are recorded as a component of gain (loss) on
mortgage-backed securities through the statement of earnings.

Our investments in non-investment grade securities and residuals were retained
from prime, subprime and manufactured housing private-label securitizations or
purchased from third party issuers on the secondary market.

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##### Table of Contents



The detail of other investment grade and non-investment grade mortgage-backed
securities by credit rating as of March 31, 2002 and December 31, 2001 follows:

|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |        | 
|----------------- | ----------------------------------------------------------- | - | ------- | ------ | -------- | - | ---------------------- | ------- | ----- | - | ------ | ------ |  | - | ------ | ------ | 
|                  |                                                             |   | Current |        | Discount |   |                        |         |       |   |        |        | 
|                  |                                                             |   | Face    |        | To Face  |   | Amortized              |         | Book 
|                  |                                                             |   | Value   |        | Value    |   | Cost                   |         | Value
|                  |                                                             |   |         |        |          |   |                        |         |      
|                  |                                                             |   |         |        |          |   | (Dollars in thousands) |         |       |   |       
|March 31, 2002    |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|                 
|                 
|                 
|                 
|AA                |                                                             | $ | 21,248  |        |          | $ | (118                   | )       |       | $ | 21,130 |        |  | $ | 20,491 |       
|                 
|                 
|                 
|                 
|A                 |                                                             |   | 2,375   |        |          |   | (141                   | )       |       |   | 2,234  |        |  |   | 2,244  |       
|                 
|                 
|                 
|                 
|BBB               |                                                             |   | 8,819   |        |          |   | (644                   | )       |       |   | 8,175  |        |  |   | 8,169  |       
|                 
|                 
|                 
|                 
|BBB-              |                                                             |   | 2,436   |        |          |   | (193                   | )       |       |   | 2,243  |        |  |   | 2,285  |       
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|                  | Total other investment grade mortgage-backed securities     |   | $       | 34,878 |          |   | $                      | (1,096  | )     |   | $      | 33,782 |  |   | $      | 33,189 | 
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|B                 |                                                             | $ | 12,676  |        |          | $ | (7,885                 | )       |       | $ | 4,791  |        |  | $ | 4,948  |       
|                 
|                 
|                 
|                 
|CCC               |                                                             |   | 2,169   |        |          |   | (2,169                 | )       |       |   |       |        |  |   |       |       
|                 
|                 
|                 
|                 
|D                 |                                                             |   | 5,374   |        |          |   | (5,185                 | )       |       |   | 189    |        |  |   | 189    |       
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|                  | Total other non-investment grade mortgage-backed securities |   | $       | 20,219 |          |   | $                      | (15,239 | )     |   | $      | 4,980  |  |   | $      | 5,137  | 
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|December 31, 2001 |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|                 
|                 
|                 
|                 
|AA                |                                                             | $ | 21,341  |        |          | $ | (125                   | )       |       | $ | 21,216 |        |  | $ | 21,103 |       
|                 
|                 
|                 
|                 
|A                 |                                                             |   | 2,382   |        |          |   | (142                   | )       |       |   | 2,240  |        |  |   | 2,307  |       
|                 
|                 
|                 
|                 
|BBB               |                                                             |   | 14,605  |        |          |   | (696                   | )       |       |   | 13,909 |        |  |   | 14,037 |       
|                 
|                 
|                 
|                 
|BBB-              |                                                             |   | 2,712   |        |          |   | (194                   | )       |       |   | 2,518  |        |  |   | 2,595  |       
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|                  | Total other investment grade mortgage-backed securities     |   | $       | 41,040 |          |   | $                      | (1,157  | )     |   | $      | 39,883 |  |   | $      | 40,042 | 
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|BB                |                                                             | $ | 12,676  |        |          | $ | (7,831                 | )       |       | $ | 4,845  |        |  | $ | 4,845  |       
|                 
|                 
|                 
|                 
|CCC               |                                                             |   | 11,061  |        |          |   | (10,624                | )       |       |   | 437    |        |  |   | 437    |       
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       
|                  | Total other non-investment grade mortgage-backed securities |   | $       | 23,737 |          |   | $                      | (18,455 | )     |   | $      | 5,282  |  |   | $      | 5,282  | 
|                  |                                                             |   |         |        |          |   |                        |         |       |   |        |        |  |   |        |       

The $33.2 million in other investment grade mortgage-backed securities and the
$5.1 million in non-investment grade mortgage-backed securities at March 31,
2002, was retained from our private-label security issuances. At March 31,
2002, prime loans, subprime loans and manufactured housing loans collateralized
$29.5 million, $3.7 million, and $5.1 million of the total investment,
respectively.

LOANS RECEIVABLE

Total loans receivable, exclusive of the allowance for loan losses, decreased
to $4.3 billion at March 31, 2002, from $5.1 billion at December 31, 2001. The
decrease in loan balances corresponds with our overall strategy to sell the
majority of the mortgage loans that we acquire within a short period after
origination. During the first quarter of 2002, mortgage loans held for sale
were held on average 43 days prior to sale. The average length of time a
mortgage loan was held in inventory during 2001 was approximately 60 days.
During the first quarter of 2002, sales of loans in our held for sale portfolio
were $4.3 billion and production was $3.7 billion compared to sales of $3.8
billion and production of $4.1 billion during the fourth quarter of 2001.

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Loans, exclusive of the allowance for loan losses, consisted of the following:

|                          |                          |             |           |                |           |                   |      |                        |       |   |           |           |           |  |      |      |       |  
|------------------------- | ------------------------ | ----------- | --------- | -------------- | --------- | ----------------- | ---- | ---------------------- | ----- | - | --------- | --------- | --------- |  | ---- | ---- | ----- | -
|                          |                          |             |           | March 31, 2002 |           | December 31, 2001
|                          |                          |             |           |                |           |                  
|                          |                          |             |           | Balance        |           | %                 |      | Balance                |       | %
|                          |                          |             |           |                |           |                   |      |                        |       |  
|                          |                          |             |           |                |           |                   |      | (Dollars in thousands) |       |   |           |          
|Loans held for sale       |                          | $           | 1,325,447 |                |           |                   | 30.7 | %                      |       | $ | 2,080,763 |           |           |  | 41.0 | %   
|                         
|                         
|                         
|                         
|Loans held for investment
|                         
|                         
|                         
|                         
|                          | Mortgage
loans           |             |           | 1,512,941      |           |                   |      | 35.1                   | %     |   |           | 1,531,757 |           |  |      | 30.2 | %    
|                         
|                         
|                         
|                         
|                          | Residential construction |             |           | 1,274,410      |           |                   |      | 29.5                   | %     |   |           | 1,321,473 |           |  |      | 26.0 | %    
|                         
|                         
|                         
|                         
|                          | Income property          |             |           | 78,410         |           |                   |      | 1.8                    | %     |   |           | 58,616    |           |  |      | 1.2  | %    
|                         
|                         
|                         
|                         
|                          | HELOC                    |             |           | 123,087        |           |                   |      | 2.9                    | %     |   |           | 84,511    |           |  |      | 1.7  | %    
|                          |                          |             |           |                |           |                   |      |                        |       |   |           |           |           |  |      |     
|                          |                          | Total loans |           | $              | 4,314,295 |                   |      |                        | 100.0 | % |           | $         | 5,077,120 |  |      |      | 100.0 | %
|                          |                          |             |           |                |           |                   |      |                        |       |   |           |           |           |  |      |     

Asset Quality

Loans are generally placed on non-accrual status when they are 90 days past
due. Non-performing assets include non-performing loans and foreclosed assets.
The balance of our foreclosed assets, defined as properties acquired in
foreclosure or by deed in lieu of foreclosure, are recorded at estimated net
realizable value. We recognized net gains on sale of foreclosed assets of $581
thousand during the three months ended March 31, 2002.

A summary of our non-performing assets follows:

|                                            |                            |                          |                             |        |                        |         |              |        |        |         | 
|------------------------------------------- | -------------------------- | ------------------------ | --------------------------- | ------ | ---------------------- | ------- | ------------ | ------ | ------ | ------- | 
|                                            |                            |                          |                             |        | March 31,              |         | December 31,
|                                            |                            |                          |                             |        | 2002                   |         | 2001        
|                                            |                            |                          |                             |        |                        |         |             
|                                            |                            |                          |                             |        | (Dollars in thousands)
|Loans held for investment                   |                            |                          |                             |        |                        |         |              |       
|                                           
|                                           
|                                           
|                                           
|                                            | Portfolio loans           
|                                           
|                                           
|                                           
|                                           
|                                            |                            | Mortgage
loans           |                             | $      | 34,614                 |         |              | $      | 28,868 |        
|                                           
|                                           
|                                           
|                                           
|                                            |                            | Residential construction |                             |        | 30,260                 |         |              |        | 28,069 |        
|                                            |                            |                          |                             |        |                        |         |              |        |       
|                                            |                            |                          | Total portfolio loans       |        |                        | 64,874  |              |        |        | 56,937  | 
|                                           
|                                           
|                                           
|                                           
|                                            | Discontinued product lines |                          |                             | 14,531 |                        |         |              | 15,894 |       
|                                           
|                                           
|                                           
|                                           
|Loans held for sale                         |                            |                          | 25,081                      |        |                        |         | 24,036       |       
|                                            |                            |                          |                             |        |                        |         |              |        |       
|                                            |                            |                          | Total non-performing loans  |        |                        | 104,486 |              |        |        | 96,867  | 
|                                           
|                                           
|                                           
|                                           
|Foreclosed assets                           |                            |                          | 16,133                      |        |                        |         | 19,372       |       
|                                            |                            |                          |                             |        |                        |         |              |        |       
|                                            |                            |                          | Total non-performing assets |        | $                      | 120,619 |              |        | $      | 116,239 | 
|                                            |                            |                          |                             |        |                        |         |              |        |       
|Total non-performing assets to total assets |                            |                          | 1.68                        | %      |                        |         | 1.55         | %     
|                                            |                            |                          |                             |        |                        |         |              |        |       

The average recorded investment in non-performing loans during the three months
ended March 31, 2002 and December 31, 2001 was approximately $113.2 million and
$104.2 million, respectively.

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Allowance for Loan Losses

Following is a rollforward of the allowance for loan losses:

|                                                |  |                              |        |      |  |   |        |  
|----------------------------------------------- |  | ---------------------------- | ------ | ---- |  | - | ------ | -
|                                                |  | Three Months Ended March 31,
|                                                |  |                             
|                                                |  | 2002                         |        | 2001
|                                                |  |                              |        |     
|                                                |  | (Dollars in thousands)      
|Balance, beginning of period                    |  | $                            | 57,700 |      |  | $ | 58,962 |  
|                                               
|                                               
|                                               
|                                               
|Provision for loan losses                       |  |                              | 4,186  |      |  |   | 9,000  |  
|                                               
|                                               
|                                               
|                                               
|Portfolio
Loans:                                |  |                              |        |      |  |   |        |  
|                                               
|                                               
|                                               
|                                               
|Charge-offs net of recoveries:                  |  |                              |        |      |  |   |        |  
|                                               
|                                               
|                                               
|                                               
|Mortgage loans                                  |  |                              | (772   | )    |  |   | (163   | )
|                                               
|                                               
|                                               
|                                               
|Residential construction                        |  |                              | (973   | )    |  |   | (604   | )
|                                                |  |                              |        |      |  |   |        |  
|Charge-offs net of recoveries  Portfolio Loans |  |                              | (1,745 | )    |  |   | (767   | )
|                                               
|                                               
|                                               
|                                               
|Discontinued
Product Lines:                     |  |                              |        |      |  |   |        |  
|                                               
|                                               
|                                               
|                                               
|Charge-offs net of recoveries:                  |  |                              | (3,239 | )    |  |   | (2,082 | )
|                                                |  |                              |        |      |  |   |        |  
|Balance, end of period                          |  | $                            | 56,902 |      |  | $ | 65,113 |  
|                                                |  |                              |        |      |  |   |        |  

The following table sets forth the allocation of our allowance for loan losses
and the percentage in each category to the total allowance at the dates
indicated.

|                            |                          |                                 |        |                |        |                     |    |                        |     |                     |        |        |        |  |    |    |     |  
|--------------------------- | ------------------------ | ------------------------------- | ------ | -------------- | ------ | ------------------- | -- | ---------------------- | --- | ------------------- | ------ | ------ | ------ |  | -- | -- | --- | -
|                            |                          |                                 |        | March 31, 2002 |        | December 31, 2001  
|                            |                          |                                 |        |                |        |                    
|                            |                          |                                 |        | Balance        |        | % of
TotalAllowance |    | Balance                |     | % of
TotalAllowance
|                            |                          |                                 |        |                |        |                     |    |                        |     |                    
|                            |                          |                                 |        |                |        |                     |    | (Dollars in thousands) |     |                     |        |       
|Portfolio Loans:            |                          |                                 |        |                |        |                     |    |                        |     |                     |        |        |        |  |    |   
|                           
|                           
|                           
|                           
|                            | Mortgage loans           |                                 | $      | 16,913         |        |                     |    | 30                     | %   |                     | $      | 16,201 |        |  |    | 28 | %  
|                           
|                           
|                           
|                           
|                            | Residential construction |                                 |        | 24,231         |        |                     |    | 42                     | %   |                     |        | 24,512 |        |  |    | 42 | %  
|                           
|                           
|                           
|                           
|                            | Income property          |                                 |        | 1,058          |        |                     |    | 2                      | %   |                     |        | 1,058  |        |  |    | 2  | %  
|                            |                          |                                 |        |                |        |                     |    |                        |     |                     |        |        |        |  |    |    |    
|                            |                          | Total portfolio loans           |        |                | 42,202 |                     |    |                        | 74  | %                   |        |        | 41,771 |  |    |    | 72  | %
|                           
|                           
|                           
|                           
|Discontinued Product Lines: |                          |                                 | 14,700 |                |        |                     | 26 | %                      |     |                     | 15,929 |        |        |  | 28 | % 
|                            |                          |                                 |        |                |        |                     |    |                        |     |                     |        |        |        |  |    |    |    
|                            |                          | Total allowance for loan losses |        | $              | 56,902 |                     |    |                        | 100 | %                   |        | $      | 57,700 |  |    |    | 100 | %
|                            |                          |                                 |        |                |        |                     |    |                        |     |                     |        |        |        |  |    |    |    

Allocation of the allowance is only an analytical tool as the allowance is
available for losses in the entire portfolio.

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

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losses be increased based on their evaluation of the information available to
them at the time of their regular or special examination of the Bank.

Secondary Market Reserve

In addition to the allowance for loan losses, the Company maintains a secondary
market reserve for credit losses that arise in connection with loans that we
are required to repurchase from whole loan sales or securitization
transactions. This reserve has two components: a reserve for repurchases
arising from representation and warranty claims, and a reserve for disputes
with investors and vendors with respect to contractual obligations pertaining
to mortgage operations. Since inception in 1993, the Company has repurchased
only a very small amount of loans from its securitization trusts, or SPEs.
Inception-to-date, we have repurchased $19.7 million from GSE sales, $12.9
million of loans from whole loan sales, and $4.2 million from securitization
trusts related to standard representation and warranty claims. These balances
represent 0.12%, 0.10%, and 0.01% of total GSE, whole loan, and securitization
sales, respectively, inception-to-date.

The calculation of the secondary market reserve is a function of expected
losses based on actual pending claims and repurchase requests, historical
experience, loan volume and loan sales distribution channels. The balance in
the secondary market reserve was $31.7 million at December 31, 2001. During
the first quarter of 2002, we provided $2.7 million for future losses, which
was offset in part by $2.0 million for claims reimbursements and estimated
losses on loan repurchases. This activity resulted in an ending balance in the
secondary market reserve at March 31, 2002 of $32.4 million. This balance is
included on the consolidated balance sheet as a component of other liabilities.
Of the balance, $10.9 million represents reserves for loan repurchases, and
$21.5 million represents reserves to cover potential adverse claims from or
settlements with investors and vendors. While the ultimate amount of
repurchases and claims is uncertain, management believes that the reserve is
adequate. The Company will continue to evaluate the adequacy of the entire
secondary market reserve and likely will continue to allocate a portion of its
gain on sale proceeds to this reserve going forward.

MORTGAGE SERVICING RIGHTS

Mortgage servicing rights totaled $390.1 million as of March 31, 2002 and
$321.3 million as of December 31, 2001. The increase in the mortgage servicing
rights balance was primarily due to mortgage servicing rights retained,
totaling $72.5 million, resulting from an increase in securitizations and sales
to GSEs during the three months ended March 31, 2002. This increase was offset
in part by amortization and valuation adjustments.

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##### Table of Contents



The assumptions used to value mortgage servicing rights at March 31, 2002 and
December 31, 2001 follow (dollars in thousands):

|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|------------------------------- |  | ------ | ------- | --------------------- |  | ----- | ---------- | --------- |  | ------- | ---- | -------- |  | -------- | ---- | -------- |  |  | ---- | - |  | ---- | ---- |  |  |  | ---- | - |  |  | ---- | -
|                                |  | Actual |         | Valuation Assumptions
|                                |  |        |         |                      
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  | Wtd. |      |  |  |  |      |   |  | 
|                                |  | Book   |         | Collateral            |  | Gross |            | Servicing |  | 3-Month |      | Avg.     |  | Lifetime |      | Discount
|                                |  | Value  |         | Balance               |  | WAC   |            | Fee       |  | CPR     |      | Multiple |  | CPR      |      | Yield   
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |         
|March 31, 2002                  |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|                               
|                               
|                               
|                               
|Master servicing                |  | $      | 26,979  |                       |  | $     | 8,155,023  |           |  |         | 8.34 | %        |  |          | 0.10 | %        |  |  | 46.7 | % |  |      | 3.41 |  |  |  | 16.7 | % |  |  | 13.9 | %
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|Primary servicing               |  |        | 363,152 |                       |  | $     | 23,086,082 |           |  |         | 8.03 | %        |  |          | 0.44 | %        |  |  | 30.0 | % |  |      | 3.58 |  |  |  | 17.0 | % |  |  | 11.3 | %
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|Total mortgage servicing rights |  | $      | 390,131 |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|December 31, 2001               |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|                               
|                               
|                               
|                               
|Master servicing                |  | $      | 27,218  |                       |  | $     | 9,581,919  |           |  |         | 8.36 | %        |  |          | 0.10 | %        |  |  | 40.9 | % |  |      | 2.84 |  |  |  | 18.8 | % |  |  | 17.3 | %
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|Primary servicing               |  |        | 294,098 |                       |  | $     | 19,889,540 |           |  |         | 8.28 | %        |  |          | 0.45 | %        |  |  | 29.2 | % |  |      | 3.28 |  |  |  | 19.9 | % |  |  | 12.6 | %
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|Total mortgage servicing rights |  | $      | 321,316 |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  
|                                |  |        |         |                       |  |       |            |           |  |         |      |          |  |          |      |          |  |  |      |   |  |      |      |  |  |  |      |   |  |  |      |  

The lifetime CPR represents the constant prepayment rate we estimate for the
remaining life of the collateral supporting the asset. We project prepayment
rates using four-factor prepayment models which incorporate relative weighted
average note rate, seasoning, seasonality and burn out of the pool of loans
relative to expectations of future rates implied by the forward LIBOR/swap
curve.

The weighted average multiple represents the book value divided by the product
of collateral balance and servicing fee. While the weighted average life of
such assets is a function of the undiscounted cash flows, the multiple is a
function of the weighted average life of the discounted cash flows. The
marketplace frequently uses calculated multiples to assess the overall impact
valuation assumptions have on value. When comparing multiples, collateral
type, coupon, loan age and servicing fee must be considered.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

At March 31, 2002, we had operating liquidity of $1.5 billion and a leverage
(debt to equity) ratio of 7 to 1. Operating liquidity is defined as unpledged
liquid assets on hand plus borrowing availability under committed lines of
credit subject to the availability of eligible assets for pledge as collateral.
Under prior regulations, Federal thrift institutions were required to maintain
a specified ratio of cash and other qualifying securities to net withdrawable
accounts and borrowings payable in a year or less. As a result of recent
statutory and regulatory changes, IndyMac Bank, F.S.B. (the Bank) is not
currently required to maintain an average daily liquidity balance at levels
prescribed by the OTS, but we continue to be subject to the requirement that we
maintain sufficient liquidity to ensure our safe and sound operation. Our
policy is to maintain liquid assets equal to 3% of the OTS previously defined
regulatory liquidity base (previous quarters average daily balance of deposits
and borrowings maturing within 12 months). We currently believe that our
liquidity level is adequate based upon our current activities and is consistent
with the safe and sound operation of the Bank. While there can be no guarantees
and subject to the matters discussed below, we are not aware of any trends,
demands, commitments or uncertainties that are reasonably likely to result in
our liquidity materially decreasing in the foreseeable future.

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##### Table of Contents



PRINCIPAL SOURCES OF CASH

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

Loan Sales and Securitizations

Our business model relies heavily upon selling the substantial majority of our
mortgage loans shortly after acquisition. The proceeds of these sales are a
critical component of the liquidity necessary for our ongoing operations.
During the quarter ended March 31, 2002, loans were held in our held for sale
portfolio for 43 days on average, compared to 62 days on average during the
quarter ended March 31, 2001.

Deposits

Consistent with our funding needs, we solicit short-term deposits and, to a
lesser degree, long-term deposits from the general public and institutions by
offering a variety of accounts and rates. We offer regular passbook accounts,
demand deposit accounts, money market accounts, certificates of deposit
accounts and individual retirement accounts. Deposits totaled $3.1 billion at
March 31, 2002 and $3.2 billion at December 31, 2001. It is the Companys
intent to continue to decrease its deposit balances, offset by increases in
advances from the FHLB and other borrowings, during the remainder of the year
ended December 31, 2002, to take advantage of the lower marginal costs provided
by these funding alternatives.

Included in deposits at March 31, 2002 and December 31, 2001 were custodial
accounts, primarily related to our servicing portfolio of agency securities,
totaling $375.4 million and $178.3 million, respectively.

Advances from Federal Home Loan Bank

The FHLB system functions in a reserve capacity for savings institutions. As a
member of the FHLB, we are required to own capital stock of the FHLB and are
authorized to apply for advances from the FHLB, generally on a secured basis,
in amounts determined by reference to available collateral. FHLB stock,
one-to-four family mortgage loans and AAA-rated agency mortgage-backed
securities are the principal collateral that may be used to secure these
borrowings, although certain other types of loans and other assets may also be
accepted pursuant to FHLB policies and statutory requirements. The Bank has
been pre-approved for advances up to $2.2 billion, of which $2.1 billion were
outstanding at March 31, 2002. The FHLB offers several credit programs, each
with its own fixed or floating interest rate, and a range of maturities.

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##### Table of Contents



Trust Preferred Securities and Warrants

On November 14, 2001, we completed an offering of Warrants and Income
Redeemable Equity Securities to investors. Gross proceeds of the transaction
were $175 million. The securities were offered as units consisting of a trust
preferred security, issued by a trust formed by us, and a warrant to purchase
IndyMac Bancorps common stock. The proceeds from the offering are used in
ongoing operations and will fund future growth plans. The balance of trust
preferred securities at December 31, 2001 was reclassified from mezzanine debt
to liabilities to conform to the current period presentation.

Other Borrowings

Other borrowings primarily consist of loans and securities sold under committed
agreements to repurchase, syndicated bank lines, a commercial paper conduit and
senior unsecured notes. Other borrowings decreased from $1.1 billion at
December 2001 to $0.7 billion at March 31, 2002. Two primary factors accounted
for the overall decrease in these borrowings: 1) our ability to pay off
existing borrowings from the proceeds of loan sales, which outpaced loan
originations and loan purchases in the first quarter of 2002, and 2) our
success in increasing advances from the FHLB, which is typically a lower
marginal cost financing alternative to other borrowings.

As of March 31, 2002 we had $4.2 billion in committed financing, with
outstanding balances of $736 million. Decisions by our lenders and investors
to make additional funds available to us in the future will depend upon a
number of factors. These include our compliance with the terms of existing
credit arrangements, our financial performance, changes in our credit rating,
industry and market trends in our various businesses, the general availability
and rates applicable to financing and investments, these lenders and/or
investors own resources and policies concerning loans and investments, and the
relative attractiveness of alternative investment or lending opportunities.

While there are no guarantees as to future availability of committed financing,
we are not aware of any trends, demands, commitments or uncertainties that are
reasonably likely to result in liquidity materially decreasing in the
foreseeable future.

PRINCIPAL USES OF CASH

Our most significant use of cash is for the acquisition of mortgage loans.
During the first quarter of 2002 we acquired $3.7 billion of mortgage loans
compared to $3.2 billion in the first quarter of 2001. Secondarily, we used
cash to pay down borrowings by $318 million in the first quarter of 2002 as
opposed to borrowing $110 million in the first quarter of 2001. Purchases of
mortgage-backed securities required cash resources of $305 million and $435
million in the first quarters of 2002 and 2001, respectively. In addition to
the financing sources discussed above, cash uses are funded by net cash flows
from operations, sales of mortgage-backed securities and principal payments on
loans.

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CASH FLOWS FROM OPERATING, INVESTING AND FINANCING ACTIVITIES

As presented in the consolidated statements of cash flows, we had a net
increase in cash and cash equivalents of $230.4 million in the first quarter of
2002 compared to a net decrease in cash and cash equivalents of $32.1 million
in the first quarter of 2001.

Operating Activities

Net cash provided by operating activities was $483.2 million in 2002 as opposed
to the net cash used in operating activities of $584.6 million in 2001, an
increase of $1.1 billion. This increase in cash provided by operating
activities primarily resulted from our secondary marketing operations. Since
we are a mortgage banker, our loan purchases and sales are considered operating
activities. Sales of and payments from mortgage loans held for sale exceeded
the purchases and originations of these loans by $594.9 million in 2002 as
opposed to the reverse being true in 2001  loan purchases and originations
exceeded sales and payments by $606.6 million.

Investing Activities

Net cash provided by investing activities was $105.6 million in 2002 compared
to $289.4 million of net cash used in investing activities in 2001, an increase
of $395.0 million. This was primarily due to net purchase activity of
mortgage-backed securities. During the first quarter of 2001, the Company
increased its investment in mortgage-backed securities available for sale by
$344.5 million through net purchases, whereas net purchases totaled only $41.6
million during the first quarter of 2002.

Financing Activities

Net cash used in financing activities was $358.5 million in 2002 compared to
the net cash provided by financing activities of $841.9 million in 2001, a
decrease of $1.2 billion. The Company used the cash received from the sale of
its mortgage loans and mortgage-backed securities to pay down its borrowings in
2002, whereas, in 2001, the Company was increasing its investment in loans and
securities, and funded those acquisitions with additional borrowings.

REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. As a condition to its approval of the
acquisition of SGV Bancorp, Inc. in July of 2000, the OTS mandated that
the Bank hold Tier 1 (core) capital at 8% of adjusted assets for three years
following the consummation of the transaction and maintain a risk-based capital
position of 10% of risk-weighted assets. Additionally, Tier 1 risk-based
capital (core capital plus supplementary capital less allowance for loan
losses) must be equal to at least 6% of risk-weighted assets. The Bank
currently meets all of the requirements of a well capitalized institution.

During 2001, the OTS issued guidance for subprime lending programs, which
requires a subprime lender to quantify the additional risks in its subprime
lending activities and determine the appropriate amounts of allowances for loan
losses and capital it needs to offset those risks. The OTS guidance suggests
that subprime portfolios be supported by capital equal to one and one-half to
three times greater than what is appropriate for similar prime
assets. The OTS has accepted IndyMac Banks approach to conform to this guidance.

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The following table presents the Banks actual and required capital ratios and
the minimum required capital ratios to be categorized as well-capitalized at
March 31, 2002.

|                |                   |  |          |       |                     |  |                  |       |                  |  |  |       |         |  |  |       |  
|--------------- | ----------------- |  | -------- | ----- | ------------------- |  | ---------------- | ----- | ---------------- |  |  | ----- | ------- |  |  | ----- | -
|                |                   |  |          |       |                     |  | Adjusted for     |       |                  |  |  |       | IndyMac
|                |                   |  | As       |       | Additional Subprime |  | Well-Capitalized |       | Required Capital
|                |                   |  | Reported |       | Risk-Weighting      |  | Minimum          |       | First 3 years   
|                |                   |  |          |       |                     |  |                  |       |                 
|Capital Ratios: |                   |  |          |       |                     |  |                  |       |                  |  |  |       |         |  |  |      
|               
|               
|               
|               
|                | Tangible          |  |          | 10.09 | %                   |  |                  | 10.09 | %                |  |  | 2.00  | %       |  |  | 2.00  | %
|               
|               
|               
|               
|                | Tier 1 core       |  |          | 10.09 | %                   |  |                  | 10.09 | %                |  |  | 5.00  | %       |  |  | 8.00  | %
|               
|               
|               
|               
|                | Tier 1 risk-based |  |          | 14.95 | %                   |  |                  | 14.15 | %                |  |  | 6.00  | %       |  |  | 6.00  | %
|               
|               
|               
|               
|                | Total risk-based  |  |          | 15.88 | %                   |  |                  | 15.03 | %                |  |  | 10.00 | %       |  |  | 10.00 | %

The ratios above do not include $156 million of unleveraged and unencumbered
capital at IndyMac Bancorp. Including the excess capital held by the Bank, we
had $304 million of total excess capital at March 31, 2002.

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




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

In general, market risk is the exposure to loss resulting from changes in
interest rates, commodity prices and equity prices. The primary market risk to
which we are exposed is interest rate risk, including fluctuations in short and
long term interest rates. An additional risk is the early prepayment of loans
held for investment, mortgage-backed securities and mortgage loans underlying
our mortgage servicing rights, AAA-rated interest-only securities and
residuals. We do not have any exposure to foreign currency exchange rates.
Our Investment Portfolio group is responsible for the management of interest
rate and prepayment risks subject to policies and procedures established by our
management level Asset and Liability Committee (ALCO) and board of directors
level ALCO. See KEY OPERATING RISKS in the Companys annual report filed on
Form 10-K for the year ended December 31, 2001 for further discussion of risks.

HEDGING ACTIVITIES

We utilize a variety of means to manage interest rate risk. On a macro basis,
we invest in mortgage servicing rights and AAA-rated interest-only securities,
the fair market values of which tend to increase as market interest rates rise,
to hedge potential decreases in production volumes and gain on sale of

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loans due to increases in interest rates. With regard to the pipeline of
mortgage loans held for sale, in general, we hedge this asset with a forward
commitment to sell a Fannie Mae or Freddie Mac security of comparable maturity
and weighted average interest rate. To hedge our investments in AAA-rated
interest-only securities and mortgage servicing rights, we use several
strategies, including investing in AAA-rated principal-only securities, buying
and/or selling mortgage-backed or U.S. Treasury securities, futures, floors,
swaps, or options, depending on several factors. Lastly, we enter into swap
agreements and utilize FHLB advances to mitigate interest rate risk on mortgage
loans held for investment. In connection with all of the above strategies, we
use hedging instruments to reduce our exposure to interest rate risk, not to
speculate on the direction of market interest rates.

ALCO closely monitors interest rate risk. The primary measurement tool used to
evaluate risk is an interest rate shock analysis. An interest rate shock
analysis simulates the effects of an instantaneous and sustained change in
interest rates (in a variety of basis point increments) to parallel and
non-parallel yield curve shifts, on our assets and liabilities, commitments and
hedges. The result is an estimate of the increase or decrease to our earnings,
OCI and net portfolio value of our assets.

The following table sets forth our estimate of the impact of an instantaneous
and sustained parallel shift in the LIBOR/swap curve of 50 and 100 basis
points, or .50% and 1.0%, respectively, all else being constant, on net
earnings and OCI as of March 31, 2002 and December 31, 2001:

|                         |                                   |  |                                    |        |          |  |                        |        |        |  |   |        |   |  |   |         |  
|------------------------ | --------------------------------- |  | ---------------------------------- | ------ | -------- |  | ---------------------- | ------ | ------ |  | - | ------ | - |  | - | ------- | -
|                         |                                   |  | Effect of Change in Interest Rates
|                         |                                   |  |                                   
|                         |                                   |  | Decrease                           |        | Increase
|                         |                                   |  |                                    |        |         
|                         |                                   |  | 100 bp                             |        | 50 bp    |  | 50 bp                  |        | 100 bp
|                         |                                   |  |                                    |        |          |  |                        |        |       
|                         |                                   |  |                                    |        |          |  | (Dollars in thousands) |        |        |  |  
|As of March 31, 2002:    |                                   |  |                                    |        |          |  |                        |        |        |  |   |        |   |  |   |        
|                        
|                        
|                        
|                        
|                         | Net earnings                      |  | $                                  | (3,937 | )        |  | $                      | (3,919 | )      |  | $ | 1,363  |   |  | $ | 1,543   |  
|                        
|                        
|                        
|                        
|                         | Other comprehensive income (loss) |  |                                    | 8,215  |          |  |                        | 5,282  |        |  |   | (6,764 | ) |  |   | (14,359 | )
|                         |                                   |  |                                    |        |          |  |                        |        |        |  |   |        |   |  |   |         |  
|                         | Total comprehensive income (loss) |  | $                                  | 4,278  |          |  | $                      | 1,363  |        |  | $ | (5,401 | ) |  | $ | (12,816 | )
|                         |                                   |  |                                    |        |          |  |                        |        |        |  |   |        |   |  |   |         |  
|As of December 31, 2001: |                                   |  |                                    |        |          |  |                        |        |        |  |   |        |   |  |   |        
|                        
|                        
|                        
|                        
|                         | Net earnings                      |  | $                                  | 9,302  |          |  | $                      | 714    |        |  | $ | 332    |   |  | $ | 311     |  
|                        
|                        
|                        
|                        
|                         | Other comprehensive income (loss) |  |                                    | 12,758 |          |  |                        | 7,363  |        |  |   | (8,636 | ) |  |   | (18,105 | )
|                         |                                   |  |                                    |        |          |  |                        |        |        |  |   |        |   |  |   |         |  
|                         | Total comprehensive income (loss) |  | $                                  | 22,060 |          |  | $                      | 8,077  |        |  | $ | (8,304 | ) |  | $ | (17,794 | )
|                         |                                   |  |                                    |        |          |  |                        |        |        |  |   |        |   |  |   |         |  

The decrease in net earnings associated with a 100 basis point decrease in
rates at March 31, 2002 compared to the position at December 31, 2001 is
primarily due to a reduction in our investment in option-based hedges (i.e.,
interest rate floors and swaps). Such instruments are used to hedge mortgage
servicing rights and AAA-rated interest-only securities and increase in value
at an accelerated rate for large downward movements in rate, resulting in
relatively large gains. In response to the increase in market interest rates
during the first quarter of 2002, we rolled out of certain contracts and
extended other contracts, which reduced the impact of large gains in the
significant downward movement of rates scenario, but continues to provide
similar coverage in other interest rate movement scenarios. The decreases in
OCI associated with increases of 50 and 100 basis points in interest rates do
not reflect the mitigating effect interest rate swap agreements, fixed rate
FHLB advances and term deposits would be expected to have on spread income if
rates were to rise.

The assumptions inherent in our interest rate shock models include valuation
changes in an instantaneous and parallel rate shock and assumptions as to the
degree of correlation between the hedges and hedged assets and liabilities.
These assumptions may not adequately reflect factors such as the
spread-widening or spread-tightening risk between the change in rates on
Treasury, LIBOR/swap

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curve and mortgages. In addition, the sensitivity analyses described in the
prior paragraphs are limited by the fact that they are performed at a
particular point in time and do not incorporate other factors that would impact
our financial performance in these scenarios, such as increases in income
associated with the increase in production volume that could result from the
decrease in interest rates. Consequently, the preceding estimates should not be
viewed as a forecast, and it is reasonable to expect that actual results could
vary significantly from the analyses discussed above.

ALCO monitors our hedging activities to ensure that the value of hedges, their
correlation to the balance sheet item being hedged, and the amounts being
hedged, continue to provide effective protection against interest rate risk.
While there can be no assurances that our interest rate management strategies
will be effective, we believe we have adequate internal controls to monitor and
manage our interest rate risk.




PART II




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | Exhibits                                                                                                                                                    
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | 10.1   Employment
Agreement dated February 28, 2002 between IndyMac Bank and Scott
Keys.                                                                    
|   
|(b) |  | Reports on Form 8-K                                                                                                                                         
|   
|    |  | The Company filed a report on Form 8-K on January 8, 2002. Items
included: Item 5. Other Events regarding the Dividend Reinvestment and
Stock Purchase Plan.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Pasadena,
State of California, on May 14, 2002 for the three months ended
March 31, 2002.

| |  |                                                                                                                   
| |  | ------------------------------------------------------------------------------------------------------------------
| |  | INDYMAC BANCORP, INC.                                                                                             
|
| |  |                                                                                                                   
|
| |  | By:      /s/ Michael W. Perry
Michael W. Perry
Vice Chairman of the Board of Directors and
Chief Executive Officer
|
| |  |                                                                                                                   
|
| |  | By:      /s/ Scott Keys
Scott Keys
Executive Vice President and
Chief Financial Officer                           

-31-